Trade Update Impact on the Marine Industry - PowerPoint Presentation

Trade Update Impact on the Marine Industry

Webinar Presenter T. Nicole Vasilaros, Esq.Senior Vice President Government and Legal Affairs

On Today’s webinar Tariff Overview and Marine Industry Impact Section 301Background Current Status Impact on the Marine Industry Take Action Exclusion Request Process Engage in the Process Send Your Story Lend Your Voice Q&A

Tariff Overview Marine Industry Impact

Marine Industry Antidumping and Countervailing Duties (AD/CVD) Chinese Aluminum SheetRetaliation Section 232 Steel and Aluminum Section 301 China NAFTA

Tariffs Impact All of the marine Industry Components Raw Materials Exports Section 232: 10% aluminum, 25% steel worldwide AD/CVD case on Chinese aluminum sheet: 200% In 2017, 117,000 or 44% of boats sold were primarily aluminum based. Increase costs YTD = 30% Section 301 tariffs impact more than 300 commonly used marine components and products from China - including inflatables, engines, propellers, navigation, fiberglass, and trailer tires. Tariff ranges from 10-25% depending on tariff list More targeted products possible Canada (10%), Europe (25%), Mexico (15%) 69% of boat exports and total value of $982.6 million . Retaliation from trading partners targets ALL BOATS, not just aluminum, destined for their markets with tariffs.

Tariffs = Tax Tariffs are a tax on goods imported from overseas, making them less attractive to consumers. In the 1990’s a 10% tax on boats nearly sunk the industry, resulting in numerous boat manufacturers going out of business and nearly 25,000 American workers losing their jobs. Demand for marine products is highly elastic and sensitive to even small changes in the sales price of boats. Increased tariffs for raw materials will increase the overall product cost and place additional burdens on the end user’s purchasing power. Marine industry being squeezed from both angles– higher input costs and less demand/sales of exports

Section 301

Section 301 Tariffs: Background Under the Trade Act of 1974, the U.S. Trade Representative (USTR) initiated an investigation into China’s unfair trade practices and continued infringement of intellectual property.

Section 301 Tariffs: Current Status April 2018 President Trump propose s a 25 % tariff on $50 billion worth of Chinese goods, including marine engines and components. June 2018 President Trump imposes a 25% tariff on $34 billion (List 1) worth of Chinese goods, including marine engines and components effective July 6, 2018. June 2018 President Trump proposes an additional 25% tariff on $16 billion (List 2) in Chinese goods. July 2018 USTR invites public comment on List 2 and holds public hearing. Post-Hearing Comments due July31, 2018. May 2018 NMMA submits comments requesting the removal of tariffs on marine products and participates in Section 301 public hearing. July 2018 President Trump proposes a 10% tariff on $200 billion (List 3) worth of Chinese goods. July 2018 USTR announces process for List 1 product exclusion requests due by October 9, 2018. July- August 2018 USTR invites public comments on List 3 due August 17, 2018. The public can also request to testify in person during an August hearting in Washington, written requests are due Friday, July 27, 2018.

List One StatusEffective July 6, 2018: U.S. imposes 25% tariff against Chinese goods worth $34 billion in annual trade value. Marine products including aluminum and steel wires, rods, and bars, propellers, hydro jet engines, combustion engines, fuel injection pumps, manufacturing machinery, antenna receivers, display monitors and navigational instruments are included in the USTR list.Example of Impacted HTS Codes 8407.21.00 Marine propulsion spark-ignition reciprocating or rotary internal-combustion piston engines for outboard motors 8529.10.40 Radar, radio navigational aid and radio remote control antennas and antenna reflectors, and parts suitable for use therewith 8487.10.00 Ships' or boats propellers and blades therefor 8412.90.10 Parts of hydrojet engines for marine propulsion 8537.10.80 Touch screens without display capabilities for incorporation in apparatus having a display To view the full list click here: https://ustr.gov/sites/default/files/enforcement/301Investigations/List%201.pdf

List Two Status Proposed 25% tariff on $16 billion worth of Chinese goods, including floating docks various electric motors.The list of products is under further review in a public comment process, and after completion of this process, USTR will issue a determination on the additional products subject to additional duties.Example of Impacted HTS Codes 8905.90.10 Floating docks 8501.20.40 Universal AC/DC motors of an output exceeding 74.6 W but not exceeding 735 W 8501.31.40 DC motors, nesoi , of an output exceeding 74.6 W but not exceeding 735 W To view the full list of products click here: https://ustr.gov/sites/default/files/enforcement/301Investigations/List%202.pdf

List Three StatusProposed tariff of 10% on $200 billion worth of Chinese goods.List includes boats, marine parts, trailer tires and fiberglass. July 27, 2018: Due date for filing requests to appear and a summary of expected testimony at the public hearing.August 17, 2018: Due date for submission of written comments. August 20-23, 2018: Section 301 public hearing in the main hearing room of the U.S. International Trade Commission, 500 E Street SW, Washington DC, 20436 beginning at 9:30 am. August 30, 2018: Due date for submission of post-hearing rebuttal comments. Example of Impacted HTS Codes 8903.10.00 Vessels, inflatable, for pleasure or sports 8903.91.00 Vessels, sailboats, with or without auxiliary motor, for pleasure or sports 8903.92.00 Vessels, motorboats (o/than outboard motorboats), for pleasure or sports 8903.99.05 Vessels, canoes, not of a type designed to be principally used with motor or sails 8903.99.15 Vessels, row boats, not of a type to be principally used with motors or sails 8903.99.20 Vessels, outboard motorboats, for pleasure or sports 8903.99.90 Vessels, yachts and other vessels for pleasure or sports, nesoi 8907.10.00 Inflatable rafts (o/than used for pleasure or sports of 8901.10) 7019.11.00 Glass fiber chopped strands of a length not more than 50 mm 7019.12.00 Glass fiber rovings 4011.90.10 New pneumatic tires, of a kind nesoi, have a herring-bone or similar tread 4011.90.20 New pneumatic tires, of a kind nesoi, have a radial tread4011.90.80 New pneumatic tires, nesoiTo view the full list click here: https://ustr.gov/sites/default/files/301/2018-0026%20China%20FRN%207-10-2018_0.pdf

Section 301: Frequently Asked Questions Who pays the tariff?I don’t import from China directly, am I impacted?Why are boats being targeted? When do the tariffs end? Will other products be added?

How you can help

Exclusion Process USTR has published a process for impacted companies to submit requests for product exclusion from List 1.Due Date: October 9, 2018. Request must include: identify a particular product provide supporting data and the rationale for the requested exclusionIs the product, or a comparable product, available from sources in the United States?Is this product, or a comparable product, available from sources in third countries?Whether the imposition of additional duties on the particular product would cause severe economic harm to the requestor or other U.S. interests. USTR will evaluate each request on a case-by-case basis, taking into account whether the exclusion would undermine the objective of the Section 301 investigation. If approved, the exclusion will apply retroactively and last for one year after the publication of the exclusion determination in the Federal Register

Exclusion Process Follow the link below to submit a product exclusion request using the form shown here to USTR by October 9, 2018 on Regulations.govhttps://www.regulations.gov/document?D=USTR-2018-0025-0002OR Follow the Procedures To Request the Exclusion of Additional Particular Products outlined in this Federal Register Notice https://ustr.gov/sites/default/files/enforcement/301Investigations/FRN%20exclusion%20process.pdf

Engage in the Process Submit comments opposing tariffs to USTR Request to testify at Section 301 Committee Hearing by July 27, 2018 on the $200 billion listSubmit written comments on the $200 billion list by August 17, 2018Comment Now!Follow this link to submit your comments to Regulations.gov https://www.regulations.gov/comment?D=USTR-2018-0026-0001

Send your Story Your stories are critical in telling our industry story!Are you facing higher costs of raw materials or component parts, order cancellations, sales loss? Elected officials need to hear specific examples of the local impact to businesses and jobs in order to reverse the current course.These stories are extremely powerful as NMMA meets with lawmakers and the Administration and implore them to consider boating impacts.

Lend Your Voice Communicating our story and your business impact to local, state, DC, and national media helps call attention to the negative effects of tariffs as they hit the U.S. boating industry. Send in letters, call your elected officials, use social media and share with your industry colleagues. The more we call, write, and tweet the louder our voice will be heard.Boating United is a fast and easy way to contact elected officials directly, follow this link to tell Congress and the administration to end these tariffs! https://www.votervoice.net/NMMA/Campaigns/60216/Respond The NMMA team is here to help get your voice out. Please contact John-Michael Donahue jdonahue@nmma.org - 202.737.9755

Questions? For more information, visit www.nmma.orgNicole Vasilarosnvasilaros@nmma.org202-737-9763