Politics aside, changes to the US import tariff rate are expected to be announced tomorrow morning at 9am NZST (Thu in NZ but Wed in the US). The latest speculation is that White House aides have drafted plans for 20 percent tariffs on most goods imported to the United States.
But what does it mean for the NZ marine industry?
For starters, when a NZ company imports goods from the US (there is no free trade agreement with the US) the NZ government levies a tax on those goods. And vice-versa; the US imposes an import tax, a tariff, on NZ goods coming into the US. The taxes are a percentage of the product’s value, and those taxes go to the government.
Why apply a tariff on imported goods? A simplistic view, but perhaps the best view for now; to encourage growth in industries that make those goods domestically, or to level the global trade playing field. For various reasons, the tariff equation is not entirely black and white. Invariably, the cost of the tariff is usually swallowed by the end-purchaser.
The Observatory of Economic Complexity (OEC), an online data visualisation and distribution platform which focuses on the geography and dynamics of economic activities, indicated that in 2023, NZ exported $108M in recreational boats, making it the 22nd largest exporter of recreational in the world. At the same year, recreational boats was the 55th most exported product in NZ. The main destination of recreational boat exports from NZ were Australia ($43.1M), US ($22M), UK ($18.5M), Canada ($3.43M), and Saudi Arabia ($3.33M). The fastest growing export markets for recreational boats of NZ between 2022 and 2023 were the UK ($12.4M), Australia ($5.99M), and the US ($3.87M).
Many NZ boat builders export into the US market, including Stabicraft, Profile Boats, Kiwi-Kraft (known as Aqualine overseas), Makaira, and Sealegs amphibious craft.
Of note, recreational boat sales into the US market has decreased year-on-year since 2020. According to the United Nations COMTRADE database on international trade, the US imported US$16.97 Million of recreational boats (ships, and other floating structures are also in the same category) from NZ in 2024. For recreational boats, the US federal import duty rate is currently 1.5% of the boat’s value. Individual state tariffs (some states charge zero extra tariffs while others are up to 2.4%) and other import fees may also apply on top of that rate.
Note, that the NZ IRD indicates that any vessel, which includes a recreational boat, purchased that are capable of being exported from New Zealand under their own power can be zero-rated. Zero-rated supplies are supplies that are not subject to GST in certain situations. A rate of 0% applies to these supplies.
The OEC, also shows that in 2023, NZ imported $139M in recreational boats, mainly from Australia ($45.5M), the US ($28.9M), France ($11.4M), China ($10.4M), and Singapore ($7.46M).
NZ imports of US recreational boats has fluctuated much more than NZ exports of recreational into the US. The COMTRADE database, showed that NZ imported US$13.91 Million of recreational boats (ships, and other floating structures, etc) from the US was during 2024. The NZ government tariffs the importer with a 5% import duty and the purchaser with an additional 15% GST (Goods and Services Tax) of the boat’s value. The importer will also have to pay freight and insurance costs.
As seen, above, the latest information is that a 20 percent tariff will be applied to most goods imported into the US. If this policy goes into effect, it will lead to higher US import tariffs on NZ-imported boat (and related industry).
To strengthen their presence in North America and to provide local service to their customers, Stabicraft, NZ’s Invercargill-based boat builder, expanded into the US in 2022 with a new 16,800 sq ft manufacturing facility in Port Angeles, Washington. This move allowed the company to design boats in New Zealand and build them in the USA to meet growing demand.
Startup, Vessev, who make future-thinking electric foiling vessels, also recently announced that it too is looking to manufacture in the US. “We are also exploring the opportunities to build our state-of-the-art vessels in the US, which will both create jobs and set the foundations for our service and support business in the US.” new US Sales Director of Vessev, Josh Trout, commented.
The current exchange rage will also have an effect. Putting the tariff discussion to one side; as I write this article, NZ$1,000,000 is equivalent to US$568,045. Add 20% import tariff in the US for NZ-imported boats and the figure rises to US$683,924.
I thought I’d take a closer look at the same boat in NZ and in the US. A brand new 2023 Extreme Boats 745 Game King is being sold in NZ on Boating and Outdoors for NZ$259,995. Today, US-based Boat Trader is selling the same boat for US$169,000. After tomorrow, the same boat might potentially increase to beyond US$177,800.
We will have a better picture of what will happen a little after 9am tomorrow. We will keep you updated.
