China Tariffs on Lobster Brings Varied Response From Dealers

The United States tariff on Chinese goods that triggered a 25% retaliatory Chinese tariff on U.S. goods has delivered a combination blow to the Maine lobster industry. The Chinese stopped buying Maine lobster and they simply went a few miles up the road and bought more Canadian lobster. Some in the U.S. lobster industry fear the business relationships the Chinese develop with Canada as a result of these tariffs may outlast the tariffs.

Maine lobster dealers are being hit hard by the loss of the China market. How hard depends on how much of their business depends on the China market. Stephanie Nadau, a lobster dealer in Kennebunkport, said, “The tariff on lobster has cut our business by 50%.” In the lobster business for 28 years, Nadau’s The Lobster Company ships to domestic and export markets. “If the tariff doesn’t go away by this fall I am seriously considering going out of business”, Nadau said.

Getting deep into the weeds on lobster markets, Shucks Maine Lobster founder John Hathaway described different paths to lobster markets and none of them were to China. The Shucks website reads, “Shucks Maine Lobster started as a small, 20 seat, family owned Maine Lobster and Oyster bar in Kennebunkport, Maine. Johnny, a Maine native, and his five young children, ages 8-18 at the time, opened the popular summer seafood attraction simply as a way for the five children to all work together during their summer vacation.”

“The tariffs are another reason why,” said Hathaway, “the lobster industry can and should focus on developing quality lobster food products”.

Hathaway sees more advantages in developing U.S markets for lobster. Among them are market stability, U.S. jobs, reduced costs associated with shipping and exposure to sudden, unforeseen shocks like tariffs. He said, “there is far more U.S market for Maine lobster than there is Maine lobster. The Maine brand is in demand. People want to know where their food is coming from. Maine lobster is local, sustainably harvested in clean waters by owner operators in small boats. The story is real, the product is real and consumers know it is not just another manufactured corporate marketing hype.”

Lobster marketers began looking at China in 2012 when the markets in Maine and Canada were flooded with shedders and the bottom fell out on the price. The term “new shell” was coined at that time in an effort to improve the image of the plentiful early-season soft shell lobster’s market appeal. Hathaway said “the marketing of these live lobster as ‘new shell’ delivers a disappointing product because they have so little meat in that stage of their growth. The net result is a negative to the Maine brand”.

Hathaway said his business is growing satisfactorily. He has won international awards for his lobster products and praise from the chefs who use them.

The Maine Coast Lobster Company in York said they have been heavily invested in Asian markets and that they are working to offset the declining sales to China that followed the imposition of the 25% Chinese tariff. Sheila Adams, VP of sales at the company said, “We have a diverse customer base in a number of countries. We are doubling down our daily focus on bringing in lobster from wherever it is available”.

“The 25% China tariff on top of the 7% from CETA, the Comprehensive Economic and Trade Agreement between Canada and the European Union, has got us paying very close attention to international trade issues,” she said.

Adams said, “We are focused on southeast Asian countries. The China market is big to replace, but we did well last year in southeast Asia and our efforts in the middle east are developing markets. Domestically new sectors are evolving both in the U.S and Canada. We are remaining flexible to take advantage of emerging opportunities”.

“In 2018 we traveled to Vietnam, Taiwan and Hong Kong. It is expensive, but we consider face time and being in country to be important in developing trade relationships. We also spend time in Washington, D.C. working on international trade. Annie Tselkis, Executive Director of the Maine Lobster Dealers Association has also helped us out a lot”, said Adams.

The Maine Coast Lobster Company also has a live lobster holding facility for international shipping on the Boston Fish Pier. How international is their focus? The communications link on their website offers 102 language options from Albanian to Zulu.

Nadau said, “We were on the front lines when Asian markets were emerging and among the first to ship lobster to China. We were their sole U.S. supplier in 2010”. Asked about the impact to her business from the loss of a big customer like China, she said. “We’re not going to replace China. I have a facility in Canada and could ship out of Canada, but I don’t want to live in Canada. Our lobster goes to Canada and becomes Canadian lobster when they put a Canadian health inspection sticker on it.” The company has established markets in Malaysia, Korea, Hong Kong and southeast Asia.

About the 25% retaliatory Chinese tariff on American lobster Nadau said, “The White House knows nothing about tariffs. The president just said (On May 9, 2019) the Chinese are paying the tax. Really? The tariff may as well be 100%”, said Nadau.

Hathaway has focused on taking advantage of existing and developing new domestic markets. He said he has invested in new technology, equipment and science to develop new lobster products that are aligned with the way consumers want to eat lobster in the 21st century. “One of the first things I noticed when we opened our lobster and oyster restaurant was that most customers did not want a whole lobster on a plate, which they had to handle and break up to eat. That’s the way we did it growing up, but that’s not the way in most of the country today”, he said. His company produces a number of ready-to-use lobster products.