Important Exports

Michael Ho™worth looks at the p’otential trad†e w™ars „between™ Europe an† the good† ol†ed USA, and† considers how™ this could† effect the sales of superyachts in Europe

They are overpaid, over sexed and over here! Such was the complaint heard in the UK during the last war when the Americans entered the fray. Yes I know they came to the world war late as usual but we will have to gloss over that bit. But now there is a new war, a trade war and it could begin to affect our own industry. It began with the current President of the USA using protectionist measures to safeguard jobs and industries in his own country. Angered by losing potential export sales, countries whose products were being subjected to extra tariffs cried foul and then, in best school playroom fashion, decided on tit for tat tariffs on American inputs into Europe.

It appears that the European Commission believes that America’s new trade policy limits importations into their country to protect American business despite America’s insistence that it is for National Security reasons. The Commission prefers to call them safeguarding measures and believes that they will have a negative economic impact on EU industry because they risk limiting the exports of some products from the EU to the US. So now because European steel and aluminium is going to be more difficult to sell in the USA, Europe has decided that in response to US duties it will slap a tax on motorbikes, jeans, bourbon and yes you have guessed it, superyachts!

This means that sailing yachts with or without auxiliary engines and motor yachts both of whose LOA exceeds 12 metres, that are being imported from the US into the European Union, will be required to pay an additional 25% customs duty on top of the already high VAT that all yachts being imported into Europe are currently obliged to pay. This response the Commission says, has been implemented under Regulation (EU) 2018/724, amended with (EU) 2018/886, as a direct response to the US’s changes in trade policy, which has seen the US implement safeguarding measures in the form of a tariff increase on imports which were introduced on 23 March 2018 with an unlimited duration. Reading between the lines this seems not to include superyachts from the USA while navigating in EU waters under any temporary admission scheme. From what I read the new duties only refer to yachts and vessels used for sport and pleasure. It specifically does not include cruise ships, cargo ships or any other vessel employed in the transport of persons and goods, which rather makes a mockery of the whole thing.

So why do it all? Everyone knows motorbikes come from Japan and not the USA (unless you are a fan of Harley Davidson). Denim jeans come from sweatshops in Bangladesh, Sri Lanka or India and who in their right mind drinks bourbon when good whisky comes from Scotland? What European in their right mind buys a Westport when he could have a Heesen or contemplates commissioning a Delta when they could have a Feadship?

By announcing these pathetically punitive measures that are going to have no real impact, the European Commission simply risks escalating the trade war to the point that the USA begins to look hard at who exactly is buying European superyachts and will quickly realise it is their own taxpayers. Tariffs could be slapped on US buyers visiting European yacht designers, shipyards and equipment suppliers. Now that would really cause our industry grief.

Then there is the crew element. Suppose America got really iffy and started telling its citizens they could no longer employ foreign crews on yachts owned by them. Yes we know they can always hide behind the flags of convenience but if the US wanted to, it could establish clear links between yachts and American owners and that would cause yet more potential grief.

Look, I am not an American, and I am not condoning the US as it tries to stamp out world trade but it does seems to me that not only are these petty European Commission reprisals not going to have any real effect, they do in effect come potentially close to us shooting ourselves in our own foot.