The ongoing trade war between the U.S. and China has continued to escalate since Trump fired the first shot with his tariffs on solar products, steel, and aluminum. And as Trump continues to add more tariffs against Chinese goods coming into this country, China has retaliated.
China is a major buyer of lobsters, and it imposed a heavy tariff on exports from the US in early July amid the trade war hostilities. And even worse, as the Trump tariffs continue to pile up, China has responded by ceasing its purchases of lobster from the U.S., shifting instead towards purchasing from Canada.
This move has caused the U.S. lobster business with China to dry up. In turn, wholesale prices on live lobsters have dipped a bit as dealers have lost customers. The Lobster Co. of Arundel, Maine, resorted to laying off four people, which constituted 25 percent of its wholesale staff, says Stephanie Nadeau, the company’s owner.
“I can cut my variable costs and tuck my head in and see if this storm passes,” she says. “What they’ve done is made it so everybody is fighting over the remaining customers. Price goes down, margins go down.”
And this is really bad news for the lobster industry in the U.S. The Chinese have really grown to like American lobster, so much so that lobster imports grew from $108.3 million in 2016 to $142.4 million last year – and that is pretty darned good, seeing as China barely imported American lobster 10 years ago.
There is more to this story
The Bangor Daily News is reporting that “Maine is sending far more lobsters to Canada this year as that country’s exports to China booms.” As a matter of fact, Canadians doubled their purchase of live lobsters this July, buying $43.72 million worth of lobsters from Maine.
According to the Seafood Source, the value of live lobsters exported from Maine dropped 64 percent in July 2018 from July 2017. And this was coupled with the sudden rise in lobster shipments from the Canadian Maritimes. Halifax’s Stanfield International Airport has gone from having one to five weekly seafood air shipments to Asia, representing a 63 percent rise in lobster shipments year-over-year.
U.S. lobster sellers say the trade war is only part of the story. They cite high prices, an early and robust soft-shell lobster season, and high demand for processed frozen lobster also are driving up exports of live lobsters. And all Maine lobster exported to Canada is live – and much of the live lobster is processed for the frozen lobster market and sold back to the U.S. market.
“Things this year are different than last,” said John Norton, founder and president of distributor Cozy Harbor Seafood in Portland. “There was an earlier shed and stronger catch in June, July, and August. So there was more lobster to be processed into the frozen product this year than last.”
Norton adds that another thing boosting exports to Canada is the higher prices. “The onshore price this week is 25-35 cents per pound higher this year than last year,” he said. “That is primarily due to the strength of the frozen market. That’s a 9 percent price increase to the shore even with tariffs in place right now.”
Exports of live lobster from Maine to Canada rose to $43.72 million in July 2018 from $327,458 in June, according to figures from WISERTrade, an international trade data firm. That compares to $19.14 million in July 2017, up from $629,632 in June 2017.
Interestingly, both Norton and Nadeau say they have heard rumors that Canada may be selling the live lobsters from the U.S. to China, but they have no proof the rumors are true.
Geoff Irvine, the executive director of the Lobster Council of Canada in Halifax, said it wouldn’t make sense for Canada to resell U.S.-sourced lobster, The country-of-origin labels are right on the shipment, showing the product is from the United States. “I don’t know why anyone would want to do that,” he said.
“In July, typically our processors buy a lot of Maine lobster,” he said. “And we have millions of pounds of lobsters that our exporters have in holding facilities.”
