Worries and challenges: New England lobster industry going through 2018 trade war

2018 has proven to be a difficult year for China-US trade relations, dominated by frictions triggered by Washington.

The lobster industry in New England thrived after discovering the Chinese mainland market a few years ago, and was among the first victims of the trade war.

A staff member packs lobsters at lobster dealer Tom Adams’ company in Portland, Maine in December 2018. [Photo: China Plus/Liu Kun]

It's minus-8 Celsius at a small port near Pourtsmouth, New Hampshire as 24-year-old lobsterman Anthony Kleiner returns from the sea. He is unloading lobsters from his boat to a truck.

Lobsterman Anthony Kleiner (left) unloads lobsters from his boat in a port near Portsmouth, New Hampshire in December 2018. [Photo: China Plus/Liu Kun]

Kleiner left before dawn and returned around 4 PM. He tells me the day has been good, but rising prices of bait and fuel, plus the thought of tariffs, have made it harder to be genuinely happy.

"Today was a good day. I think we got 14 or 15 crates. About 1500 pounds. It's starting to get a little harder for everybody, with the tariff, price of baits going up, price of fuel going up. The price of lobsters hasn't done its justice. That's pretty hard."

US lobster exports mainly come from the New England area --- Maine, New Hampshire and Massachusetts included. Statistics show that about ten years ago the US was barely selling any lobsters to the Chinese mainland. However, fast forward to 2016, and the US sold lobsters worth over $100 million to the Chinese mainland. The next year, the total was over 140 million.

The booming business came to a sudden halt in July when the US government launched a trade war against China. For lobstermen who remain on the upper side of the supply chain, the trade war may only be a distant worry now, but for lobster dealers, the pain of the trade war has already been felt.

When I first met Tom Adams, a lobster dealer in Portland, Maine, he was trying to redirect sales to any market outside the Chinese mainland. And now in December when I meet him again, he tells me the new markets are being established but things haven't fundamentally improved.

"We had some other challenging times in the industry. We had challenge in 2008, 2009, when the whole world economy was struggling. Then we had challenge after'911'. '911'caused disruption in the way we ship. We are an industry that relies on air freight. This year had been one of those challenging years that I've had in the last 7.5 years."

Adams says 20% of the roughly 7 million pounds of lobsters he sold in 2017 went to the Chinese mainland. However, because of the tariff incurred during the trade war, that figure is likely to drop to around 10% in 2018.

Lobsters harvested in New England would usually go through Maine, then New Hampshire, down to Boston Logan International Airport in Massachusetts, where they are flown to China. Compared with Nova Scotia in Canada, a traditional rival for lobster exports, New England is better placed because of its better air freight infrastructure. But the trade war has cost the American lobster industry its competitive edge.

Matthew Thoi owns a freight forwarding company close to Boston Logan. He says the company started shipping live lobsters to China back in 2012, and 2018 is becoming the worst year in this business.

"We started shipping lobsters to China since 2012 when the China market was started. We've been shipping more and more every year since then. However, this year because of the tariff American lobsters are getting less advantage against Canadian lobsters. This year I believe is the worst year for shipping to China."

Thoi's company shipped around 5 million pounds of live lobsters to China in 2017. He is expecting that number to drop significantly in 2018 and says some companies would probably see it drop about 50%.

While lobster dealers and freight forwarders are struggling to deal with the industry disruptions, representatives of lobster industry associations are commuting between New England and Washington to lobby policy makers, trying to stop the trade war. executive director Annie Tselikis of the Maine Lobster Dealers' Association says she spent much of the latter half of the year on lobbying.

A staff member grades lobsters at lobster dealer Tom Adams’ company in Portland, Maine in December 2018. [Photo: China Plus/Liu Kun]

"Ever since then it's just been consistent lobbying efforts, with our congressional delegation, with trade policy makers at the USTR, with basically anybody that will listen to us and is interested in helping US businesses continue to access to the Chinese market. We formed coalition groups with farmers, retail federations, with people who are concerned with trade and commerce. I think the message has been strong."

With a total worth of around 1.4 billion dollars, the Maine lobster industry constitutes about 3% of the state's GDP and creates about 17000 jobs. Tselikis says discovering the China market over the past ten years or so has been crucial for Maine to absorb the increasing amount of lobster harvest happening almost simultaneously. She adds that it's a hard-to-accept fact the China market is almost gone so suddenly since the trade war, especially considering the time and investment Maine dealers have put in.

The lobstermen, dealers and freight forwarders in New England represent only a small portion of the victims of the trade war. According to a December report by American think tank the Tax Foundation, tariffs already imposed by the US government would reduce the long-run GDP of the country by $30.4 billion and eliminate 94,300 full-time equivalent jobs. Most of these tariffs target products coming in from China. The Foundation also estimated that if the US government moves forward with the planned tariffs, they would cause another $94.4 billion of GDP loss and eliminate another 300,000 jobs.

Executive Director Brian Kuehl of Farmers for Free Trade, a national lobbying group, spoke at the Council on Foreign Relations during an event in December.

"I don't see you blow up one side of the world and say we are going to be somehow immune from that impact. You know they say the winner of a trade war is the person who doesn't participate."

On December 1st, Chinese President Xi Jinping and his U.S. counterpart, Donald Trump, agreed at a meeting in Buenos Aires to continue trade talks between the two countries and stop imposing new tariffs.

The meeting was closely watched by many around the world. 8000 kilometers away, lobsterman Kleiner, freight forwarder Thoi, trade representative Tselikis and lobster dealer Adams all read the statements released after the meeting, very carefully. They all said they hope normal trade relations between the two sides could resume as soon as possible. Tom Adams:

"The news that came out of the G20 meeting in Argentina was the most positive news that I've had since June when the tariffs were announced. US and China for the foreseeable future are going to be the two largest economies and it only makes sense for us to be most valued trading partners with each other."