Trump's trade war with China creates unexpected winner: Canada's lobster industry

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Long hours, rolling ocean swells, and the occasional spring snowstorm are all part of the job for Francis Morrissey.

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“It’s bred into you from the time you’re a child: You either like the ocean or you don’t,” said the fisherman and business owner from the Canadian province of Prince Edward Island. “Even when I’m in the office, I wish I was out there.”

In recent months, Morrissey has had even more reason to head back out on to the water: prices are at record levels and demand is only growing as Donald Trump’s trade war with China undercuts America’s own lobster industry, giving an unexpected boost to fishermen north of the border.

The U.S. lobster industry was dealt a fresh blow in July, when China announced new tariffs on live lobsters, as part of a broader levy on exports from the U.S. The latest move will add an additional 10% to the price of lobsters headed for China, which already face 25% penalty tariffs.

Related: US and China agree to reopen trade talks in October

One clear winner of the trade war has been Canada, which has exported twice as many live lobsters in 2019 as the previous year, according to industry figures.

“We’ve just picked up a lot more of the market than we had before,” said Geoff Irvine, head of the Lobster Council of Canada. “And at the same time, the market is growing, so it’s a twofold story.”

Canada was well-positioned for market dominance. It was already the largest lobster supplier in the world, and has signed free trade agreements with Europe, the U.S. and a number of Asian countries in the Trans-Pacific Partnership.

The booming fortunes of Canada’s lobster industry have also have been aided by a changing climate. The waters around Nova Scotia, where the bulk of lobster are hauled from the Atlantic Ocean, have warmed slightly in recent years, dramatically increasing the number of lobsters that can be harvested.

© AP ‘We’ve just picked up a lot more of the market than we had before,’ said Geoff Irvine, head of the Lobster Council of Canada.

As a result of global demand, Canada’s lobster market share is expected to continue its blistering growth, surpassing more than $3 billion by 2025 – triple the figure for 2010 – according to figures from the Department of Fisheries and Oceans. Much of the demand is projected to come from Asia.

“Nine years ago, China didn’t buy any lobster,” said Irvine. But rapidly growing middle and affluent classes in the country have spurred demand for luxury shellfish.

Canadian fishermen are hesitant to weigh in on the trade war, fearful they might be caught in the crossfire – and for good reason: Canada has its own problems with China.

As recently as last year, talks of a free trade pact between China and Canada looked promising. But diplomatic relations between the two countries entered a deep freeze following the arrest of the telecoms executive Meng Wanzhou in Vancouver at the request of the U.S.

In recent months, China has sharply curtailed canola and pork markets imports from Canada, in a move largely seen as retribution for Meng’s detention.

And as the tariff war drives greater demand for live Canadian lobster, Irvine cautions against premature celebration. “You can’t generalize in this industry. Even with the increased sales to China, it’s meant less for other markets – which has affected people who are focused on those markets.”

But the effects of the trade war have been unavoidable south of the border: U.S. lobster fishermen are struggling to stay afloat.

Stephanie Nadeau, who runs the Lobster Company in Arundel, Maine, said she never experienced such bleak prospects.

Over the past year, exports to China have ground to halt, forcing her to lay off seven employees – nearly half of her staff. “We have no market in China right now. None,” she said.

“Unless you want to go sell for nothing and you have a giant salesforce that can sit there and beat the phones all day, you’re not going to replace [the Chinese market],” she said.

In previous years, the U.S. and Canada exported roughly the same amount of lobster to China. By June this year, Maine, America’s largest lobster exporter, was supplying just 15% of the toothsome crustacean, while Canada accounted for 85%.

In the first six months of 2019, U.S. lobster exports to China dropped to just 2.2 million pounds compared with 12 million pounds in the same period in 2018.

More than a year into the trade war, U.S. lobster fishermen and women can see no end to their economic pains – and little sign that their plight has even been recognized by their own government. “How long am I supposed to sit here and not make any money?” asked Nadeau.