EASTHAM — The trade war with China is reshaping East Coast lobster sales. Whether local lobstermen feel the burn depends, for now, on where they’re fishing. But with Canada stepping up exports, industry workers worry the tariffs’ negative effects will be long lasting.
Wholesalers, whose work involves opening markets, have had sales and margins plummet this past year.
“The tariffs hit us really hard,” said Alex Hay, president of Wellfleet Shellfish Co. The company does not sell directly to China, Hay said, but to exporters like Boston Lobster Co., whose website has a page entirely in Mandarin. Hay said that his company has been building relationships with customers who export to China for a decade, and the trade war has put a dent in their business infrastructure.
Boston Lobster Co. has been forced to diversify its export market as demand from China has dropped precipitously. Sales agent Brent Lincoln said that 70 percent of his shipments were destined for China before the trade war began. Now, Boston Lobster has started sending lobster to Vietnam, Korea, and domestic markets.
“Nothing’s going to China anymore,” Lincoln told the Independent. “The only place you can ship to is Hong Kong, and even that has slowed down.”
Farther up the coast, Intershell International, a Gloucester-based wholesaler that exports to China, has also seen lobster sales fall by $3 million to $4 million this year, according to owner Monty Rome.
Rome pointed out that, while the federal government has doled out billions in relief for agribusiness, the fishing industry has received nothing. “Farmers and fishermen are very much alike — we’re feeding people,” Rome said. “They gave so much money to farmers, but we didn’t get anything.”
Canada is increasingly filling the void left by the U.S. With a large quantity of lobsters stuck in the supply chain during peak season, Canadian dealers were able to buy and sell cheap to China, Hay explained.
Bay Lobsters Too Small for Export
Not all lobsters are equally affected by the trade war. In China, size matters.
Asked to speculate on why Chinese demand for lobsters has grown in recent years, Hay said that large lobsters have “become a status symbol in China. If you can buy a big lobster, it means you’re wealthy.”
His company primarily deals in 2-to-4-pound lobsters caught in ocean waters, which are large enough to meet Chinese demand. These large lobsters used to be loaded into freighter jets and sent fresh to China.
Lobstermen fishing in Cape Cod Bay, however, typically harvest smaller lobsters that weigh in under 2 pounds.
With so many lobsters available in the domestic market, local lobstermen have been braced for prices to go down. But that hasn’t happened yet.
Lobsterman Michael Milewski, who lives in Truro but fishes out of Provincetown, expected lobster prices to fall after the last round of tariffs but said he was surprised to find that prices have stayed up. Wellfleet lobster fisherman Damian Parkington said that his prices were actually higher this year than usual.
The reasons for that counterintuitive outcome appear to be environmental.
As the Independent recently reported, a huge lobster die-off took place in Cape Cod Bay this fall due to extremely low oxygen levels in the water, resulting in low lobster stocks this season. The limited stock led to a boost in price, Parkington said.
According to a 2015 U.S. Dept. of Agriculture report, after Russia, the U.S. is the largest exporter of fish and seafood to China.
According to the National Oceanic and Atmospheric Administration, the number of lobsters exported to China quickly grew over the last decade, reaching over 8 million kilograms and $148 million in 2018. Total lobster exports to China have fallen to just over 1.5 million kilograms and $27 million in 2019.
The trade war follows escalating tensions between American and Chinese leaders. In July 2018 China levied a 25-percent tariff on U.S. seafood imports in response to the Trump administration’s imposing an equal tariff. Then, on Aug. 1, 2019, the Trump administration announced a further 10-percent tariff on Chinese goods. China responded by halting all imports of U.S. agricultural products on Aug. 5, 2019 and imposed a 10-percent retaliatory tariff.
Canada May Dominate Market
Despite recent hope that the trade war is almost over, lobster industry workers are concerned its negative effects will linger after the tariffs are lifted.
With Canada swooping in to fill the void left in the market, returning to the status quo will not be easy.
“They’re trying to take over the market,” said Lincoln of Boston Lobster Co.
“It seems like they’ve been putting in the groundwork to do shipping only out of [Canada],” he said, adding that Canadian companies are using huge freighter jets to deliver hundreds of thousands of pounds to China each week.
As Canada tightens its hold on exporting Eastern Seaboard lobster to China, U.S. exporters will face difficulty when reentering the market after the tariffs are lifted.
“Once those markets are gone, it’s hard to get the buyers back,” Milewski said.