Key Takeaways:
- The lobster industry in Canada is being affected by trade wars, including U.S. steel tariffs and Chinese import tariffs on Canadian lobsters.
- The tariffs are causing a significant increase in the cost of lobster traps, with prices rising by as much as 40% this year.
- Canadian lobster trap manufacturers are struggling to absorb the increased costs, and are being forced to raise prices or seek alternative suppliers.
- The trade wars are also affecting the demand for Canadian lobsters, with exports to China falling by 10% due to retaliatory tariffs.
- Lobster fishermen are feeling the squeeze, with increased costs and low prices making it difficult to make a profit.
Introduction to the Lobster Industry
The lobster industry in Canada is a significant sector, with exports worth $3 billion annually. However, the industry is facing significant challenges due to trade wars, including U.S. steel tariffs and Chinese import tariffs on Canadian lobsters. The tariffs are having a compounding effect on the supply chain, with the cost of lobster traps increasing significantly. The steel used to make the traps often crosses the Canada-U.S. border twice, making it subject to tariffs on both sides.
The Impact of Tariffs on Lobster Traps
The U.S. tariffs on steel imports have had a significant impact on the cost of lobster traps. The tariffs, which began at 25% in March and increased to 50% in June, have forced companies like Riverdale Mills Corp. to raise their prices. The company, which produces wire mesh for lobster traps, has paid $1 million in U.S. import duties so far this year. The Canadian government is also set to impose its own tariffs on foreign steel, including a 25% tariff on steel derivative products, which will further increase the cost of lobster traps.
The Effect on Canadian Lobster Trap Manufacturers
Canadian lobster trap manufacturers, such as SS Trap & Wire, are feeling the squeeze. The company’s owner, Joe Savoie, estimates that his costs have risen by 30-40% this year, before accounting for the new Canadian tariffs. The company produces an average of 12,000 traps annually and employs 8-12 workers, depending on the time of year. Savoie is bracing for the impact of the new Canadian tariffs, which will make it even more difficult for him to compete with cheaper suppliers from China.
The Impact on Lobster Fishermen
Lobster fishermen, such as Jason Conrad, are also feeling the effects of the trade wars. The cost of lobster traps has increased significantly, with some traps selling for as much as $360, up from $120 before the pandemic. Conrad needs between 60 and 100 traps, depending on the year, and the increased cost is a significant burden. The low prices of lobster are also making it difficult for him to make a profit, with the cost of catching each pound of lobster being around $7, while the price on offer is around $8.50.
The Uncertainty of the Season’s Haul
The trade wars are also creating uncertainty for lobster fishermen, with the demand for Canadian lobsters affected by the retaliatory tariffs imposed by China. Exports of live lobster have fallen by 10% since the tariffs were imposed, and the industry is waiting to see how the new Canadian tariffs will affect the market. The uncertainty is making it difficult for fishermen like Conrad to plan for the future, with the catch being unpredictable and the prices uncertain.
Conclusion
The lobster industry in Canada is facing significant challenges due to trade wars, including U.S. steel tariffs and Chinese import tariffs on Canadian lobsters. The tariffs are having a compounding effect on the supply chain, with the cost of lobster traps increasing significantly. Canadian lobster trap manufacturers and fishermen are feeling the squeeze, with increased costs and low prices making it difficult to make a profit. The industry is waiting to see how the new Canadian tariffs will affect the market, and how the trade wars will ultimately play out.