CADILLAC — Depending on who you ask, the problems caused by tariffs here in Northern Michigan run the gamut from virtually non-existent to severe.

One of the companies most impacted by the ongoing U.S. tariff wars with China, Europe, Canada and South America has been Group Beneteau.

Formerly Four Winns, the Cadillac boat manufacturer imports materials and components from all over the world. They also export products to countries that have been the target of recent tariffs imposed by the U.S.

Christophe Lavigne, president of the U.S. brands for Groupe Beneteau, said they suffer from both sides of the tariff battle: they pay more for components coming into the U.S. from certain countries and their products exported to some of those countries have had tariffs added to them.

"Other industries have only been hit by the cost of raw materials going up," Lavigne said. "We're one of the only ones that have been hit both ways."

Lavigne said Europe and China imposed a 25% tariff on boats coming from the U.S. in retaliation to President Donald Trump's decision to raise tariffs on their exports. With about 40% of their sales coming from exports, Lavigne said tariffs have caused a significant slow down in their business from those parts of the world.

To adjust to rising material and component costs, Lavigne said they either have to absorb the revenue loss or pass it on to customers; they've done a little of both. To adjust to the tariffs that Europe and China have imposed on their boats, they've subsidized the cost to a degree, although he said they simply can't afford to cover the entire 25% tariff increase. He said they've also considered opening a plant overseas so they can bypass the tariffs being imposed on American exports.

"It's affecting our profitability immensely," Lavigne said. "It's been really rough."

Lavigne said Trump's goal to balance the international trade deficit and protect intellectual property rights on products coming out of the U.S. is noble, although his aggressive tariff strategy has created a lot of tension overseas.

"It's not normal to have that much tension with the European countries," said Lavigne, who worries that the international perception of American products might be negatively affected by the disputes.

Lavigne said he's optimistic that the signing of the U.S.-Mexico-Canada Agreement — which should ease cost increases on raw materials such as aluminum, steel and plywood — and recent trade negotiations with China are indications things are going in the right direction.

"I'm still confident we'll be able to overcome this," Lavigne said. "But will it be in a year? Five years? I don't know."

Other Cadillac-based companies initially saw some effects from the tariff wars but things have since settled down.

Jack McCleod, Cadillac Fabrication director of operations, said their concerns about material costs spiking as a result of the trade disputes have been largely assuaged in recent days.

"Aluminum we were importing from Canada did jump at the time," McCleod said. "But the big price jump they were expecting didn't seem to happen. Material prices have really leveled out since then."

The only negative impact that McCleod said might still be lingering from the tariffs is a decline in their exports of Group Beneteau boat trailers.

Mark Howie, vice president of manufacturing for Rexair, a Cadillac company that produces home cleaning systems, said they're still dealing with higher material costs as a result of the tariffs but they've figured out ways of adapting.

"It really just makes us have to work harder to be cost-competitive," Howie said. "It will be nice when the tariffs come off. It's really the farmers, though, that will reap the most benefits (if tariffs are lifted)."

Jodi DeHate, Michigan Agriculture Environmental Assurance Program technician for Missaukee, Wexford, Kalkaska and Crawford counties, said she's talked to a few farmers who've told her they decided not to plant corn this year because tariffs made it so unprofitable for them.

Bob Lee, who owns a small dairy farm in Osceola County, said tariffs hurt dairy farmers, as well, because they couldn't access the huge Chinese market like they used to.

"The industry as a whole has been affected," Lee said. "We've made good inroads into China and whenever you cut off a segment of the market, it's going to hurt."

Lee added that the impact for him has been relatively minor and in many ways, the uncooperative weather conditions of 2019 were more harmful to his bottom line than the tariffs.

He also noted that soybean farmers probably caught the brunt of the damage from tariffs, although many also received federal assistance when the Chinese market tanked.

"Things aren't all rosy yet," Lee said. "It's been a tough go for a lot of people. That trend can't go on forever."

Cadillac News