Uncertainty hits RV industry amid U.S. trade wars with Canada, China and Mexico
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Following negotiations and pledges from Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum to address President Donald Trump’s concerns regarding border security and drug trafficking, the U.S. agreed to a 30-day pause on import tariffs for the two countries.
If a more permanent solution is not reached by March 4, experts and stakeholders say the 25% tax would cause significant headwinds for the $140 billion dollar recreational vehicle industry.
“Companies will react differently and are at different levels of preparedness for these tariffs,” said Jason Rano, vice president of government affairs for the Recreational Vehicle Industry Association, which has an office in Elkhart. “If we see decreases in production or sales, that could have an impact [on employment] but again, it will really depend on the company.”
Indiana, and more specifically, Elkhart County, is home to companies that manufacture about 85% of RVs in the United States, and hold about 60% market share of global production. Popularly known as the “RV Capital of the world,” the proposed tariffs would easily reverse the gains the industry made in the last year, with RV shipments reported to have gone up 6%.
Hypothetically, if the tariffs are enforced, a report from the Peterson Institute for International Economics estimates the direct cost to a median U.S. household to be a tax increase of more than $1,200 a year.
Canada is the largest international consumer of U.S. manufactured RVs. Last year, U.S. RV manufacturers shipped more than 29,000 units to Canada, with an estimated retail value of $1.7 billion.
Before the pause on Feb. 4, Canada’s initial phase of retaliatory tariffs listed refrigerators, freezers and other refrigerating or freezing equipment used in recreational vehicles as subject to a 25% tariff.
“On the supply chain side, there are goods coming in from China and Mexico that go into the manufacturing of RVs,” Rano said. “Before the pause on Monday, Canada had released a list of products in phase two that were going to be subject to tariffs, and RVs were on that list, so we were highly concerned.”
Apart from Canada and Mexico, the U.S. government also imposed an additional 10% tariff on Chinese imports. RV makers have historically imported hydraulic and electric parts from China, making this additional tax a harbinger for increased prices for RV buyers in 2025.
“Importing is mostly from China and Mexico,” Rano said. “There has been work by a lot of suppliers to move out of China, and that work continues. But there are still things that are very difficult to get outside of China for various reasons.”
Informed by Trump’s 2019 tariffs on some Chinese imports, Lippert Components Inc. in Elkhart, suppliers of engineered components to RV makers, started working with other trade partners to nearshore and onshore manufacturing of their vast product line of components used in RV production. On its third-quarter 2024 earnings call, CEO Jason Lippert noted that the company had been systematically de-risking out of China since 2020, and is now less reliant on the tariff-prone nation.
“There are various considerations when you’re talking about onshoring, including cost and, importantly, capacity,” Rano explained. “It takes time and investment to build up the manufacturing infrastructure that is needed to replace manufacturing infrastructure from offshore. It’s not just flipping a switch.”
Rano talks about the move by some RV makers to onshore manufacturing processes.
Lippert Components, along with Elkhart-based Thor Industries Inc., did not respond to requests for comment from Inside INdiana Business.
Last September, the RVIA released its 2025 guidance, projecting a median range of 346,100 RV shipments in 2025. Rano said the current forecast is still in effect and expects the next forecast to be released in early March.
Adding that the closure of the de mininis loophole on Chinese imports valued under $800 was one of the positive outcomes from the imposed tariffs, Rano said that his organization was pursuing more permanent legislative action that would ensure the rule was gone for good.
While the tariffs could impact companies’ bottom lines, employment and supply chains at varying levels, Rano said the RVIA was working to cushion the blow to its members.
“We’re talking with the administration, we’re talking with congressional champions and we’re working closely with our partners in Canada,” Rano said. “Both the manufacturer representatives as well as the dealer representatives, so that we’re carrying the message forward on both sides of the border.”