China’s tariffs have meant dealer layoffs



PORTLAND – Meeting at the G20 summit in Buenos Aires, Argentina last weekend, U.S. President Donald Trump and President Xi Jinping of China called a timeout on the escalating trade war that has had an serious impact on American famers and other industries that depend on exports to customers in China.

Over the past few years, China has become a major market for Maine lobsters. Last year, China imported about 5 million pounds of lobster worth some $40 million between July and September. Most of those lobsters were landed by Maine fishermen and sold through Maine dealers.

This year, in retaliation against the tariffs imposed by the U.S., the Chinese government imposed tariffs on a range of American exports including soybeans. In July, China imposed a 25 percent tariff on U.S. lobster import and lobster exports to China fell by about half.

Over the past decade, particularly in the last half-dozen years, U.S. lobster exports to China soared. In 2010, the value of lobster exports to China was about $12 million. By 2013, the value had climbed to about $60 million. Last year, U.S. lobster exports to China were slightly less than $150 million.

Much of that business was done late in the year, when the demand for lobster to celebrate Christmas, New Years and Chinese New Year was at its peak, according to Annie Tselikis, executive director of the Maine Lobster Dealers’ Association. What will happen to those sales this year is difficult to tell, she said.

Although Trump and Xi called a truce in Buenos Aires, she said, “it’s hard to predict trade in a chaotic trade climate,” she said. “We’d like to see the retaliatory tariffs revoked soon.”

In a normal market, whether for lobsters or any other commodity, price generally reflects supply and demand.

In the summer, Canadian dealers buy Maine lobster—much of it new shell—for processing into value added lobster products. This past summer, Canadian buyers were on Maine wharfs paying prices too high for the processing market, presumably to fill a demand for live lobsters from customers in the live market who couldn’t, or wouldn’t, buy directly from Maine.

The demand is apparently still strong, and that’s reflected in the price fishermen are getting for their lobsters. How long that will continue is open to question.

Last weekend, the Canadian lobster fishery opened in Nova Scotia, perhaps the most productive region anywhere, Tselikis said. That could have a significant impact on the demand for Maine lobsters, and the price.

As long as the trade war with China continues, the Maine lobster industry is likely to be in a sort of limbo. Some lobster dealers who were shipping to China have adjusted their business models and found new customers. Some Maine dealers heavily dependent on export business, though, have had to lay off employees.

Maine lobsters aren’t the only product affected by the Chinese tariffs. By most estimates, U.S. soybean farmers have seen their exports to China fall by 90 percent or more. Hog farmers and other agricultural producers are also affected.

In response to the new tariffs, the administration established a $12 billion relief fund to help the agriculture industry cope with the fallout. In August, the U.S. Department of Agriculture announced that it would make payments of about $4.7 billion to agricultural producers of seven commodities and buy about $1.2 billion worth of commodities “unfairly targeted by unjustified retaliation.”

Lobster was not among the commodities in either category.

USDA did allocate as much as $200 million to help promote foreign trade. Some of that money will likely go to the Philadelphia-based nonprofit marketing organization Food Export Northeast that extols the region’s rich bounty of apples, blueberries, cranberries, wine and dairy products. The organization works with the Maine International Trade Center, the group tasked with increasing exports for the state’s seafood industry.

That is cold comfort for lobster dealers who have lost markets in China and the European Union overseas because of increased tariffs.

The USDA payments “are not really a relief package but are to promote future trade,” Tselikis said. And, like most farmers, Maine’s lobster dealers and fishermen aren’t interested in a federal subsidy.

“It’s very frustrating for farmers and the seafood industry,” Tselikis said. “A bailout can’t replace access to the market.”

 

Stephen Rappaport

Stephen Rappaport

Waterfront Editor at The Ellsworth American
Stephen Rappaport has lived in Maine for nearly 30 years. A lifelong sailor, he spends as much time as possible messing about in boats. srappaport@ellsworthamerican.com
Stephen Rappaport

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