A new round of tariffs on Chinese imports may have a greater impact on the recreational vehicle industry than 2018’s 10% penalties. But, according to a Goshen News report, the CEO of the nation’s largest RV company said Thursday (May 9) he was not ready to quantify that impact.
“It’s been about a year we’ve been dealing with tariff talk, and I think there’s an impact,” Thor Industries President and CEO Bob Martin said of the issue ahead of President Donald Trump’s announcement Friday. “We all want fair trade, but how we get there, it will be interesting to see, and I think a lot of it is just tactics.”
Martin took a few minutes to speak on the issue during the annual RV Industry Power Breakfast held Thursday morning.
On Friday, Trump hiked his 2018 10% tariff on $250 billion in Chinese goods to 25% as trade talks with China continued. Trump also said he is considering imposing tariffs on all imports from China. China said it would retaliate with more tariffs on U.S. products.
“Tariffs will make our country much stronger, not weaker. Just sit back and watch!” Trump tweeted after making the announcement Friday morning.
As a leader in an industry already seeing a negative impact from the earlier Chinese tariffs, particularly in the areas of higher prices on steel and aluminum, Martin said the threat of increased tariffs was definitely on his radar. Exactly what such increases could mean for the industry, though, is something he was not ready to speculate about.
Acknowledging that the local RV industry is experiencing a slowdown — first quarter RV shipments were down by just over 27% compared to the same time period in 2018 — Martin noted that while some of that decline might be due to the 2018 tariffs, the bigger picture is more closely tied to the fact that the industry is simply beginning to normalize after several years of meteoric growth.
“The ultimate effect on the industry has not been as severe as many had thought,” Martin said of the initial round of tariffs. “It’s everything in the macro economy, and really for us, it was really just our dealers got higher inventories going into the year. That’s what started driving the slowdown that we’ve run into. It’s tariffs a little bit, but it’s just one piece of the puzzle.”
In its March 6 Q& A with investors concerning Thor’s second quarter results, the company stated, “Currently, we are seeing some improvements in material costs in the second quarter as steel and aluminum costs have stabilized. Although we have seen some stability in commodity costs in recent months, we may see renewed inflationary pressures if there are further tariffs imposed on Chinese or European imports.”
A day before Trump’s tariff announcement, Martin did not know the increase would become a reality, but said if it did, the RV industry is savvy and flexible enough to adjust.
“When the tariffs were first announced last year in March, it was an announcement that it ‘might’ come,” Martin said of the uncertainty surrounding the tariff discussions. “We are a very resilient industry that can react; we can change content in our units; we can work with our suppliers; we can build smaller units, etc. It takes a little bit of time to do all these things, but until you know what it is, it’s really hard to deal with. So we try not to react until we know what we’re dealing with.”
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