In a striking development, former President Donald Trump announced a sweeping 30% blanket tariff on imports from the European Union (EU). While this action, as it fits into a larger trade agenda, has created huge amounts of controversy and concern over American lobster exports, in the midst of these rising flames, the Trump administration brokered an impressive diplomatic “mini-deal” with Brussels. Accordingly, this deal will give American lobsters the same competitive market access to the EU markets as their Canadian competitors.
International trade complexities have a big effect on the lobster industry. It’s at a perilous juncture as it cuts its way through the choppy waters of tariffs and volatile market demand. The newly negotiated agreement involved the U.S. agreeing to halve its tariffs on various EU imports, including prepared meals, crystal glassware, and cigarette lighters. This vibrant trade dynamic underscores the importance of lobsters as a highly sought after commodity. It further highlights how intertwined the U.S. and Canadian lobster industries have become.
The Lobster Market and Global Demand
Today lobsters are one of the most highly sought seafood products in the world. This growing demand is primarily driven by the burgeoning middle class in China. U.S. lobster exports to China experienced a shocking 85% drop in 2019 as trade tensions intensified. Canadian lobster exports to China skyrocketed, doubling and then tripling to over $1 billion USD in three short years. This phenomenal development further showcases Canada’s growing supremacy in the industry.
These extreme contrasts between the U.S. and Canadian lobster industries are most clearly seen in lobster processing capacity. In fact, half of all Maine’s lobsters are shipped to Canada for processing. In short, Canadian facilities are a whole order of magnitude more efficient and capable than U.S. facilities. What it really underscored, though, was the competitive advantage that Canada has in the industry.
In March 2023, China retaliated against Canada by imposing a 25% tariff on Canadian lobsters. This new move is certainly related to the disputes that are currently brewing over electric vehicle tariffs. This recent trade war escalation underscores how fragile and easily disrupted trade relations are and foreshadows future instability in the lobster trade market.
The Impact of Trade Wars on Lobstermen
Together, Maine’s lobstermen exemplify a politically potent bloc of coastal capitalists that have taken control of the U.S. economy. The real-life consequences of shifting trade policies and global political dynamics hit home with a vengeance in their livelihoods. As they navigate these complexities, many have expressed concerns about the long-term sustainability of their industry amid fluctuating tariffs and competition.
Speaking about the unprecedented impacts on the lobster industry, Kyriakos Toumazos, a key player in lobster mariculture, said, “We are seeing things that we’ve never seen.” His statement runs down the unprecedented challenges lobstermen are facing. They are ill-equipped to pivot to the new trade realities that imperil their market share and profit margins.
The closely knit lobster industries on both sides of the U.S.-Canadian border add even more complexity to the situation. That 2020 surge in Canadian lobster exports to China came after Australia was banned from exporting its lobsters there. This ban was a direct outcome of escalating geopolitical conflicts between the two countries. The Australian lobster sector experienced devastating losses. In fact, sales cratered from $316 million a year to just $19 million following the ban.
Australia’s Unexpected Advantage
Ironically, as U.S. and Canadian industries continue to deal with the effects of U.S. instigated trade wars, Australia is positioned to gain the most from that chaos. As the Council on Foreign Relations explained, it was that amazing irony. Specifically, they said Australia would benefit the most from the US-EU-China lobster trade war. Australia’s lobstermen are poised to benefit as conflict adds to uncertainty. They’re not necessarily the ones doing it themselves, but they’re in a very advantageous position to profit off of it.
In today’s global trade environment, surprising dynamics like these often lead to unpredictable results. In January 2023, Australia’s southern rock lobster exports to China were up to 60% of a peak value record. This surge showcases how external factors can reshape global markets and provide opportunities for countries not directly involved in specific trade disputes.
