The Cayman Islands Tariff

One question I often get is why your boat is registered in the Cayman Islands (C.I.).

This is a decision that a new boat owner needs to make months before the boat splashes.

For a new boat, you must apply for your MMSI (essentially your boat's marine digital phone number), which is required to register your EBIRP (the thing that goes off if you have a disaster at sea). These things are often necessary for items like insurance. All of these items require you to pick a home port—or, said another way, a country to register in. I made the decision in the spring of 2024.

REIMAGINED was built in South Africa, which is an important input. Some people pick their home port based on where they live, and some take another path.

When looking at options, I, of course, began with Canada. Having Toronto as a home port would be cool. However, after a few hours of research, I realized that if I registered the boat in Canada once I sailed into Canadian waters, I would need to "import" the boat into Canada. This means I would need to pay around 30% of the boat's value in import duties (a combination of a few factors, one being that it was coming from South Africa). This is commonly referred to as a tariff. Now, I could register REIMAGINED in Canada, and if I never sailed into Canadian waters, I would not have to pay the import duty. So I needed to consider it. Would I ever want to sail in Canada? And although that answer is unclear, I did not want to create a barrier if the opportunity presented itself.

After some research, I found a handful of counties that someone could pick. I selected the Cayman Islands. I found a nice lawyer who helped me with the process. I registered in the Caymans for little money and a modest yearly fee. Done.

Now, the question is why Canada has a 30-35% tariff on boats from South Africa. What is the objective? Is Canada trying to protect their catamaran industry? No. Does Canada even have the capability to build these types of catamarans? No. So why put such a high tariff on the imports of catamarans? Laziness? Cash grab? Indifference? Who knows. The truth is that this is not bringing jobs to Canada. It is not going to spur a burgeoning catamaran industry. There is no logic.

Another question is how much lower the tariff (import duty) would have to be for me to have selected Canada. For me, that answer is 10%. If the import duty were 10%, I would have flagged my boat in Canada.

Tariffs change behaviour. This is an extreme example, but it demonstrates how we should be careful with policies that drive people and companies to change their behaviour.

I am dealing with this space a lot right now (that is for another post about my tender, which has been a year in the making). It seems that most countries have not fully considered the impacts that their decisions regarding tariffs have on people's decisions.

Tariffs have entirely rational and logical uses. But often, countries have an unrealistic point of view on the outcome of the tariffs/duties, thinking they are protecting industries or going to rebuild industries. The truth is that the infrastructure costs and the people to do the work do not exist. Therefore, it is not a tariff but a tax passed on to people with no long-term upside for the country.

I would happily give Canada a free 10%, but 30+ % was too high. So Canada loses, and the Cayman Islands wins!