My family and I took a vacation to visit friends in the
Canadian province of New Brunswick recently. New Brunswick, which is located to
the northeast of Maine, is a long drive from Georgia so we took the opportunity
to explore the area while we there. While we shopped at a lobster and seafood
shop in the seaside village of Alma, I had an interesting conversation with the
As we browsed, the owner asked me what I thought of Donald
Trump. As I usually do, I replied noncommittally that I wasn’t a huge fan of
“Well, he’s been good for us,” the Canadian shop owner replied.
He went on to explain how President Trump’s trade war had
helped Canadian lobstermen. Like many farmers and fishermen, the lobstermen of
Maine exported much of their catch to other countries, including China.
At least they did before the trade war. Seafood
Source reported that 2018 had started as a bumper year for Maine lobster,
but the implementation of tariffs quickly changed that. After China raised
retaliatory tariffs on American imports, lobster shipments declined by 84
Canadian lobster exporters, unaffected by the US-China trade
war, have picked up the slack. The shop owner explained that many importers who
had previously bought US lobster were turning to Canada. The Canadian fishermen
were benefitting both from increased volume demand for their product as well as
While we were in Canada, the going rate for local lobster
was CAD $12.99 per pound. Lobster meat was CAD $38.99 per pound. An internet price
search of Maine lobster found whole lobster prices slightly lower at about
$8.99 per pound (about CAD $11.80) but
lobster meat more expensive at $50-60. The higher price for US lobster meat may
be due to the difficulty in finding immigrant labor. (I discussed the shortage
of immigrant work visas in an article last year.)
American buyers benefitted from a favorable exchange rate in
which one Canadian dollar was equal to about 75 US cents. Customers from China
and other countries also benefit from the softer Canadian dollar when they buy
lobster from Canadian companies. Taxes on American imports and the better exchange
rate have combined to sharply boost Canadian exports.
“Our sales to China have increased dramatically this year –
around 30 to 40 percent – compared to last year,” David Xu, China
representative for lobster exporter ZF Max International, told Seafood
Canada has also benefitted from a new free trade agreement
with Europe. In 2017, Canada and the EU signed the Comprehensive Economic and
Trade Agreement. One of the provisions of this treaty is that Canadian lobsters
can be imported to Europe without a tariff. In contrast, European buyers must
pay an eight percent tax on American lobster. US lobster shipments to Europe
fell 47 percent as a result of the deal reported the Portland
Press Herald. To protect themselves, many American companies are moving at
least part of their operation to Canada.
Adding insult to injury for American lobstermen, Canadian
lobster is often shipped through the United States to buyers in China and elsewhere.
There are far more flights out of Boston and Maine than Canada’s maritime provinces
so lobster that is landed and sold in Canada is often trucked to US airports
where it is then flown around the world. Because the lobster came from Canada
and was not sold in the US, it isn’t subject to Mr. Trump’s (or Mr. Xi’s)
The plight of Maine’s lobstermen may not concern President
Trump because most of them didn’t vote for him. In 2016, the coastal districts
where the fishermen live voted for
Hillary Clinton, giving her three of the state’s four electoral votes. However,
the same story is being played out in American agriculture around the country,
including in many red states. American farmers are losing export opportunities
while foreign competitors such as Australia, Brazil, Canada, Chile, and New
Zealand take over markets that were formerly dominated by the US.
Maybe those exports from the US will resume after the trade
war is resolved, but maybe they won’t. Business relationships are being forged
between America’s competitors and our former customers. If President Trump is
re-elected then foreign customers will be leery of doing business with American
companies due to the president’s habit of implementing new tariffs on short
A major complaint of businesses during the Obama Administration
was the unstable regulatory environment in which it was difficult to make long-term
plans. That problem is worse for many businesses under President Trump. As a
businessman, Donald Trump should know that business partners value reliability.
At the same time that I was on my trip, China
reduced its tariffs, not on US imports but on those from competing
countries. In a move calculated to further reduce American exports, China eased
the import tax burden on products from countries that compete directly with
The trade war goes on and American lobstermen and farmers
and manufacturers wait to see if they will be able to sell what they produce while
they operate at a disadvantage in one of the world’s largest markets. In the
meantime, our neighbor to the north is among the countries reaping the benefits
of Donald Trump’s tariff policy.
So, if you happen to be in Canada’s maritime provinces, you
can enjoy a good deal on some very fresh lobster. While you’re there, take in
the beautiful scenery along the Bay of Fundy, benefit from a favorable exchange
rate, and enjoy Canadian hospitality, which is a lot like Southern hospitality
without the 90-degree temperatures and oppressive humidity.
And while you’re there, take just a minute to think about
President Trump’s gross misunderstanding of international trade, eh?