In February, China vowed to buy more U.S. lobster as part of a trade deal that was supposed to revive the once thriving U.S.-to-China pipeline, but the latest trade data show that has not happened – China has purchased less U.S. lobster in 2020 than it did in 2019, when the trade war was still in full swing.
In the first six months of 2020, China bought just $25.9 million of U.S. lobster, according to the U.S. Census Bureau. That is 23 percent less than what it had bought in the first half of 2019, and 61 percent less than its 2018 sales during the same period, in the final months before China slapped a 25 percent retaliatory tariff on U.S. lobster.
“I haven’t sold a lobster to China this year,” said Hugh Reynolds, owner of Greenhead Lobster in Stonington. “That used to be a big market for me, but not anymore. I know what China promised, but if they are buying again, it’s not from me. They aren’t the only ones, though. Nobody’s been buying a lot of lobster this year.”
International sales of U.S. lobster are down 47 percent through June, from $114.3 million in 2019 to $60.6 million in 2020. Each of America’s top-grossing international lobster markets saw sharp year-to-date declines – 47 percent in Hong Kong, 58 percent in Taiwan, 24 percent in Vietnam and 31 percent in Italy, to round out America’s top dollar-value foreign markets.
“That’s all COVID,” Reynolds said. “Restaurants, cruise lines, casinos all closed for much of 2020. Not just here, but everywhere.”
Even Canada, where China sourced its lobster after enacting the 25 percent tariff on U.S. lobster in July 2018, has taken a huge hit. Canadian sales to China tanked after a strong January, with February sales down 95 percent from the year before, and March sales down 69 percent, according to the Lobster Council of Canada.
But no other country is obligated to buy U.S. lobster like China. In January, as part of its phase-one trade deal, China vowed to buy $36 billion in U.S. agricultural goods, ranging from traditional field crops to wild-caught seafood, over the next two years. Lobster was the only seafood that specifically made it onto China’s mandatory agricultural shopping list.
But new federal data show that China is falling far short of its promise, buying just $6.6 billion of U.S. farm goods through June.
Of course, China can’t make its huge, fast-growing middle class rekindle its love affair with U.S. lobster. Instead, it has offered a retaliatory tariff exemption to those importers who want to buy U.S. lobster again, making it no more costly to bring into the country than Canadian lobster. But the trade data show the exemption isn’t working, at least not yet.
In June, during a meeting with fishermen in Bangor, President Trump highlighted the high-profile role that U.S. lobster is playing in the U.S.-China trade war, and he promised that his administration would take steps to ensure China was honoring its commitment to buy more U.S. seafood, especially Maine lobster.
He directed U.S. Secretary of Agriculture Sonny Perdue to include lobster in any future federal bailouts intended for farmers hurt by the trade war, and he ordered U.S. Trade Representative Robert Lighthizer to start giving him monthly reports on China’s efforts, and its progress, in meeting its phase-one promises to buy more U.S. lobster. Lighthizer’s first report was due Saturday.
Before the tariff, China was the biggest overseas buyer of U.S. lobster, with its growing middle class consuming $128.5 million of the lucky-red status symbol in 2017. The U.S. was on pace to triple its exports to China before lobster was added to that nation’s tariff hit list in July 2018. In the year following, U.S. lobster exports to China fell by 47 percent.
Despite the lingering effects of the trade war and the pandemic, China is still the biggest player in the world lobster market, even for American exporters. China was the highest-dollar foreign market for U.S. lobster in the first six months of 2020, representing 46 percent of all year-to-date foreign sales. That’s better than in 2019, when China had a 29 percent market share.
Market conditions may be improving in China, too. U.S. lobster exports have gone up steadily since February, when China was in lockdown and not a single U.S. lobster was sold there. This year’s May and June export numbers were higher than the year before. In June, the U.S. sold $6.9 million of lobster to China, more than it did in 2017, before the trade war began.
If things are improving, the timing couldn’t be better. Last year, about 80 percent of America’s foreign lobster sales took place in the second half of the year, after the shed hits Maine, which generally accounts for 80 percent to 85 percent of all U.S. lobster sales, even if the lobster landed in Maine is shipped out of Boston, New York City or New Jersey airports.
“Some members are starting to get Chinese orders again,” said Annie Tselikis, executive director of the Maine Lobster Dealers’ Association. “It’s not just about lockdown. COVID-19 has driven the cost of shipping lobsters overseas up, too. We fly lobsters over in passenger planes. If passenger planes aren’t flying, the lobster isn’t going anywhere.”
With limited air travel driving up the cost of shipping lobster, and many foreign lobster markets facing pandemic-related job losses and closures, Maine’s $1.4 billion-a-year lobster industry is struggling to survive. Dealers are rebranding lobster for the home cook, emphasizing the fast-casual nature of lobster rolls and launching direct-to-consumer sales campaigns.
The industry is tapping federal pandemic relief aid until its traditional restaurant, hotel and cruise ship markets fully reopen. One in three Maine lobstermen landed a Paycheck Protection Program loan, but the average amounts barely covered a month’s bait bill. Individual shares of Maine’s $20 million in CARES Act relief for the U.S. seafood industry will likely max out at $4,000.
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