Since the U.S.-China trade war kicked off last year, tariffs on soybeans, car parts, and pork have had everyone from economist Paul Krugman to late night host Stephen Colbert talking about the economic ramifications.
But the duty imposed on American-made amusement rides has not been much discussed.
Unless you’re Preston Perkes, executive director of administration for northern Utah’s S&S Worldwide, one of the largest of the over two dozen ride manufacturers in the U.S. Then you talk about it all the time.
“All of our returning customers that usually want to buy rides from us are talking to us about this,” Perkes says. “They aren’t signing contracts.”
Since last fall, Beijing has imposed retaliatory tariffs on American-made rides and ride parts twice, hiking the tax to a little over 25%.
Perkes says just one Chinese developer has reached out to purchase a ride since September’s round of retaliatory tariffs. In past years, China has made up half of S&S’s annual business. “When our customers are having to pay more money because of an added tariff, they’re going to look other places,” he says. “And that’s what they’ve done.”
Executives at the company fear being shut out of China’s lucrative market, as their usual customers realize they will likely have to shell out more than a million dollars in additional duties if they want to import a ride like S&S’s organ-jumbling Air Launch Coaster, capable of shooting thrill-seekers from 0 to 80 mph in 2 seconds.
Largest theme park market
Dennis Speigel, head of International Theme Park Services, a consulting firm for the amusement industry, says it’s not unusual for America’s biggest ride manufacturers to have half their clients based in China. The country’s booming middle class has proven hungry for leisure activities and Chinese real estate developers have responded with jaw-dropping amusement parks.
“If the growth continues in mainland China as it has over the last 15 years, by 2025, it’ll be the largest theme park market in the world,” Speigel says.
The U.S., home to some of the industry’s most innovative companies, is poised to play a big role in that growth, says John Gerner, the managing director of Leisure Business Advisors, a consulting company for new attractions.
But with the trade war amping up the cost of the already-pricey ride parts, Gerner says the U.S. risks losing ground as park developers gravitate toward the U.S.’s main competitors in Europe or opt for cheaper versions made in China.
“American companies may be the perceived quality leader, but it does not take long for Chinese companies to come up with a workable version that is similar,” he says. “Sadly, [the tariffs] results in what could be very valuable lost opportunities.”
It’s more than just the Chinese duties that have made the trade war such a bumpy ride for manufacturers like S&S. Dave Tolman, a ride packager at the company, says the price of their materials has risen dramatically due to tariffs imposed in Washington.
Steel prices up
“The tariffs on steel and aluminum affect us in this business a real big amount,” Tolman says. “That’s two of the main things we use.”
Since last March, when the Trump administration announced tariffs on all steel and aluminum imports, the price of the metal parts used by S&S has risen by as much as 70%, according to Perkes. Though the Trump administration walked back the tariffs with Canada and Mexico last month, he suspects the metal prices will stay high for the foreseeable future.
Perkes says it no longer makes financial sense for the company to manufacture certain ride parts in-house. Since the metal tariffs were imposed, Perkes says the company has tapped manufacturers in China to make pieces like the steel ties that hold roller coaster tracks together and walkways for ride maintenance.
“For us to work around those tariffs, we have to change our country of origin,” he says. “We have to build things in China instead of here in the United States to help our customers with the cost.”
You want to know what is really going on these days, especially in Colorado. We can help you keep up. The Lookout is a free, daily email newsletter with news and happenings from all over Colorado. Sign up here and we will see you in the morning!