This time, two years ago, things were going very well for the Maine lobster industry. Demand for the state’s main exports was increasing, especially in China, where imported lobster had become popular with the emerging middle class. In early 2019, nearly a third of Maine lobsters were destined for Asian markets, and the price was rising, reaching almost $ 5 per pound, the highest since the start of state records in 1880.
As of last year, the Maine catch was still near the all-time high. But the state’s lobster and fishing industry is not “bigger and better than anyone thought possible,” as President of the United States Donald Trump said yesterday. Under the Trump administration, the value of the Maine lobster crop has actually decreased. The culprit is the trade war between the United States and China.
The lobster fleet was traditionally seasonal, focused on serving summer demand in the United States, said Paul Anderson, executive director of the Maine Coastal Fishing Center, a research and advocacy group. But as the market expanded internationally, so did the half-trillion-dollar industry operations. Ships and processing facilities began operating year-round, and entrepreneurs and the state’s 7,000 independent lobster fishermen invested in new equipment and facilities.
Since then, the seas have been rough. The problem started in mid-2018, when lobsters were embroiled in President Trump’s trade war with China. In retaliation for the Trump administration’s first round of tariffs on Chinese goods, China began charging an additional 25% tariff on American lobster. It increased to 35% in 2019. (This year, the country reduced it to 30%).
Of course, China was still buying lobster. Importers simply switched to Canadian suppliers, which sell the same species of waters adjacent to Maine.
In Maine, exports fell dramatically, the price plummeted (“as cheap as hot dogs,” Anderson said), and the industry was suddenly oversupplied.
“When the tariffs were applied, it was a real gut hit because of all that capitalization,” Anderson said. But the industry managed to pivot again, reducing lobster sets and doubling processed products, from canned lobster to pet food, that could still find U.S. demand year-round.
Then the Covid-19 pandemic hit, hitting especially hard at the biggest lobster outlets: high-end restaurants, cruises, casinos, and resorts.
“All the creativity that had been fostered simply had no market,” Anderson said.
On Wednesday, the Trump administration attempted to undo some of the damage caused by its own policies and the pandemic, with a memorandum asking the Department of Agriculture to include lobster fishing in its $ 30 billion farmer rescue program, which was originally had focused on Midwestern produce crops. The memo also promises to make lobster a priority for the office of the United States Trade Representative, as it negotiates with China to reduce tariffs and block purchase agreements.
The second part of that equation, rescuing demand, is much more important than a rescue, Anderson said. And it’s unclear what Trump can do to help there, given that China’s own economy, and therefore its appetite for lobsters, is still unstable.
“No one knows if the Asian market will re-emerge,” said Anderson. “If demand is strong, the entire value chain can return to a normal level. But that means the Chinese have to buy lobster, and I don’t know if pressing this button will make that happen. If it doesn’t work, the fleet will be in serious trouble. “