Latest / THE DAILY BRIEF / New tariffs forced one Canadian business to halt U.S. sales

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New tariffs forced one Canadian business to halt U.S. sales · THE DAILY BRIEF

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  Speaker 1: So as we've been discussing, many Canadian businesses are trying
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  Speaker 1: to navigate the ongoing trade tensions between Canada and the
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  Speaker 1: United States, and that includes my next guest. His company
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  Speaker 1: manufactures golf carts and low-speed vehicles, which are now subject
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  Speaker 1: to the 50% tariff as of today. Jeff Halomas is
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  Speaker 1: the CEO of Similo Customs, and we've reached him in Spelmachin,
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  Speaker 1: British Columbia. Thank you for making time for us today.
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  Speaker 2: Yeah, thanks for having me.
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  Speaker 1: So 50% U.S. tariffs on golf carts and similar motor
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  Speaker 1: vehicles are now in effect as of midnight today, earlier
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  Speaker 1: this morning. How is that impacting your business?
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  Speaker 2: Yeah, I mean, it's certainly an interesting scenario. You know,
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  Speaker 2: we've kind of seen with the tariffs progressing, we've kind
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  Speaker 2: of made a decision earlier on to kind of shift
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  Speaker 2: away from that market and really focus back home. And so,
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  Speaker 2: you know, we're just playing it kind of day by
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  Speaker 2: day in that regard, but really shifting our focus back
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  Speaker 2: to Canada at this time.
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  Speaker 1: What have you seen so far when it comes to
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  Speaker 1: the impact of tariffs in the US market?
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  Speaker 2: Yeah, I mean, for us, you know, as an example,
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  Speaker 2: we shipped a vehicle to the University of Chicago several
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  Speaker 2: months ago. And it was kind of a minor tariff
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  Speaker 2: that we could certainly absorb at about $ 450 to do that.
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  Speaker 2: And about a month and a half later, we shipped
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  Speaker 2: one to a customer in Hawaii, and it was a $ 4, 800 tariff.
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  Speaker 2: So it's very unpredictable. So we've just done a company-wide
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  Speaker 2: policy on, at this time, not shipping to the U.S.
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  Speaker 2: and not selling to that market because we just can't
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  Speaker 2: predict what the outcome is going to be cost-wise. And
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  Speaker 2: having to absorb that tariff is just not realistic at
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  Speaker 2: this time.
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  Speaker 1: How much does that cut into your business?
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  Speaker 2: Well, we were shipping about 25% of our vehicles down
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  Speaker 2: to the U.S. So, you know, it certainly does cut
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  Speaker 2: into the business. However, what we're seeing on the flip
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  Speaker 2: side is we're getting reached out to buy a lot
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  Speaker 2: of golf courses in the fleet market, which we didn't
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  Speaker 2: necessarily have because they were focusing on kind of those
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  Speaker 2: legacy companies from the U.S., But we've now given Canada,
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  Speaker 2: you know, fleet operators and golf course operators another option
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  Speaker 2: so that they don't have to go down south and
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  Speaker 2: they can keep their money here in Canada.
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  Speaker 1: So in terms of expanding, pivoting, sort of restructuring, if
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  Speaker 1: you call it that, in order to account for that
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  Speaker 1: 25% of your business that used to perhaps ship to
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  Speaker 1: the United States, where are you looking now? Aside from
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  Speaker 1: domestic markets, is there international expansion?
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  Speaker 2: Yeah, there is actually. Our focus now is the European market.
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  Speaker 2: So we're going through, we're in early stages going through
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  Speaker 2: to have our manufacturing company approved to a European standard
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  Speaker 2: so our vehicles can drive on the roads and meet
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  Speaker 2: the European requirements there. We do have street legal approval
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  Speaker 2: here in Canada. And it crosses over quite well with
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  Speaker 2: the European regulations and requirements. So it's not, you know,
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  Speaker 2: a big hurdle, but it is still a process. And
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  Speaker 2: that's where we're shifting our focus to is Europe currently.
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  Speaker 1: When we think about the supports that have been announced
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  Speaker 1: by the government so far for businesses that have been
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  Speaker 1: impacted by the trade war, by tariffs, has your sort
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  Speaker 1: of industry or sector seen a lot of support? Has
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  Speaker 1: it been enough?
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  Speaker 2: So we've certainly seen some support. It's never, you know, unfortunately,
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  Speaker 2: it's never cut and dry with how it's done. There's
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  Speaker 2: a lot of paperwork and a lot of hoops to
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  Speaker 2: jump through to get that. And, you know, most of
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  Speaker 2: the time it obviously comes with payback terms and things
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  Speaker 2: like that, which, you know, which is fine. We don't
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  Speaker 2: expect handouts. So, you know, it certainly helps and we
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  Speaker 2: appreciate it. And, you know, our company and my mindset
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  Speaker 2: are of those is a mindset of, you know, we
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  Speaker 2: keep our head down and keep going forward and we
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  Speaker 2: react to what is sent our way.
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  Speaker 1: In terms of the way that you are perceiving this
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  Speaker 1: shift and this change that your company is now facing,
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  Speaker 1: I'm wondering, are you thinking that this is something that
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  Speaker 1: is permanent or something that's temporary? We've seen the U.S.
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  Speaker 1: president double down, but then also remove tariffs. I mean,
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  Speaker 1: how are you? I guess, navigating that.
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  Speaker 2: Yeah, I mean, you know, to put any confidence in
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  Speaker 2: what's happening currently and, you know, in the politics is
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  Speaker 2: pretty tough to, you know, to have any solid foundation
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  Speaker 2: on that. So we're of the mindset now that we're
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  Speaker 2: really going to shift our focus here to Canada. You know,
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  Speaker 2: Canada is a country with a lot of opportunity, especially,
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  Speaker 2: you know, in the golf course industry, there's over 2000
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  Speaker 2: golf courses across Canada. And they all need golf cards.
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  Speaker 2: So that's something we hadn't focused on so much in
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  Speaker 2: the past. And, you know, I think that's going to
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  Speaker 2: be our our our focus going forward and not worry
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  Speaker 2: so much about the flip flopping of what's going on
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  Speaker 2: with tariffs and kind of the politics. I'm not very
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  Speaker 2: political myself. So we just we just forward, you know,
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  Speaker 2: march forward and keep going.
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  Speaker 1: In terms of the golf industry here, because you said
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  Speaker 1: that that's something that you're focusing on now. Previously, was
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  Speaker 1: there a lot of supply coming in from the United States?
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  Speaker 1: And is there a pivot there that is helping you?
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  Speaker 2: Yeah, well, I mean, everything was coming in from the
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  Speaker 2: United States. We are the only Canadian golf cart manufacturer.
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  Speaker 2: We've been doing it for 16 years, but really only
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  Speaker 2: got into the fleet side of it. So supplying to
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  Speaker 2: courses last year when our local course here ordered 160
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  Speaker 2: vehicles from us. And it was based on the fact of,
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  Speaker 2: you know, the politics and the tariffs and everything that's
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  Speaker 2: going on. So in one way, it's actually, you know,
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  Speaker 2: the shift has been beneficial for us and helped us align,
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  Speaker 2: you know, with the courses and also, you know, the
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  Speaker 2: courses and even our individual customers are wanting, you know,
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  Speaker 2: a Canadian product based on what's going on right now.
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  Speaker 1: Jeff, I want to thank you for joining us today.
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  Speaker 1: We appreciate your insight.
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  Speaker 2: Great. I enjoyed being here. Thank you.
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  Speaker 1: That is Jeff Halomas. He is the CEO of Similo Customs.