Maine lobster industry feels impact of China’s tariffs

The ongoing trade war kicked off by U.S. President Donald Trump is beginning to hurt the lobster industry in Maine, U.S.A. 

In response to a wide swath of tariffs on Chinese goods instituted by the U.S., China created a set of tariffs of its own that target U.S. seafood and have already hurt some members of the lobster industry who relied on shipping their product to China. Once a niche export market of just USD 4 million (EUR 3.5 million) in 2010, Maine exported USD 132 million (EUR 116.3 million) worth of the crustacean in 2017, according to the Maine International Trade Center. 

Of that number, exports to China have been steadily increasing. Maine exported USD 42 million (EUR 37 million) worth of raw and frozen lobster to the country through June in 2017. This year, that number had more than doubled to USD 87 million (EUR 76.6 million) over the same period. 

Those numbers have made China the second-largest export market, equal to the entire European Union. As the market grew, some exporters began to increasingly plan on shipping lobsters to China. The new tariffs, however, have made thrown those plans into disarray. 

Stephanie Nadeau of The Lobster Co. in Arundel, Maine, has become the “poster child of Chinese tariffs,” she said. 

Nadeau has been featured in a wide number of news reports, from the local Portland Press Herald to stories on CBS. Her company relied on Chinese exports, but now is struggling to find a way to make up the lost sales. 

“I sold a lot, and I did throw my lot in with Chinese people, so it makes it quite difficult,” she said. She’s estimated the tariffs could cost her USD 10 million (EUR 8.8 million) in sales.

The tariffs, she said, are not the only issue that’s facing her. Initially, she thought she’d reduce her prices and take some small losses to make it through the year. 

However, the Chinese have changed more than just adding tariffs. According to Nadeau, they’re no longer pre-clearing her product like they once did, and are instead doing manual inspections. 

“They can leave your product there for a very long time,” she said. With live lobsters, that proposition means her product may spoil by the time its cleared. “What is already a risky proposition, you’ve just added an exponential amount of risk to the other end of it.”

Even without the additional burden of inspections, she said, the tariffs are being based on the prevailing average price. 

“They’re using Canadian hardshell price,” Nadeau said. “Even if I sell them USD 2.50 [EUR 2.20] cheaper, so they pay a lesser amount of tax, they’re going to tax them at an artificially high rate.”

It’s not just exporters that are feeling the pressure, either. According to the Portland Press Herald, the 25 percent tariff that has been imposed on raw imported steel by the U.S. is also driving up the price of lobster traps, passing more costs onto fishermen. 

Riverdale Mills Corp., based in Northbridge, Massachusetts, U.S.A., is the largest U.S. supplier of the wire mesh commonly used to manufacture traps. Riverdale Mills CEO James Knott Jr. told the Portland Press Herald that his company is trying to keep the cost from hitting lobstermen.

“We are who we are because of the lobster industry, so we’re doing everything we can to make sure this won’t hurt the industry,” Knott said. “We can take the hit for a while, but we need the tariffs lifted as soon as possible. It’s very damaging to us. These tariffs mean we can’t invest in our business, our employees, our equipment or technology. There is real trickle-down.”

There is, however, some relatively positive news for Maine lobster companies in need of it. Reports on lobster prices locally indicate that they’re holding steady in the retail market. Boat prices were around USD 3.50 to 4.00 (EUR 3.08 to 3.52) a pound in July, roughly on par with 2017. The price in August has dropped lower, but not any more so than it did in 2017.

While the price did fall in the wake of Chinese tariffs, it didn’t do so any more than it typically does during the summer months as the larger supply of soft-shell lobsters drives the price down. 

Still, for exporters like Nadeau, the future seems a lot more uncertain as planning for what could come next becomes more and more difficult. 

“It’s like someone put a bag over your head, and you can’t really see,” she said. “Will this go on indefinitely? You can’t really make plans. It’s very strange.”