Canadian lobster industry officials say U.S. tariff threat cause for even more diversified markets

The effects of any kind of tariffs from the United States on Canada's lobster industry could depend on timing, but officials say just the threat is further proof of the need to keep diversifying markets.

Even before being sworn in, U.S. President Donald Trump threatened to impose tariffs of up to 25 per cent on Canadian products. As of Monday, Trump had not acted on the threat and reports indicated his team could take time to first study the idea.

But Geoff Irvine, executive director of the Lobster Council of Canada, said he and others aren't waiting around to see what happens.

In a recent interview, Irvine said he and others are working to lobby U.S. officials. The effort includes work by the National Fisheries Institute, the organization that represents the American seafood industry, said Irvine.

"They've put a bunch of money together to lobby Washington because they don't want their members to pay more for Canadian seafood," he said.

"And so we're reminding anybody that will listen that American importers make money on our fish and they don't want to lose that revenue."

Irvine said a positive for the sector right now is that there isn't much inventory for live or frozen lobster and there isn't a lot of production happening because it's the middle of winter.

"If it's three months of tariffs, it's not going to impact us dramatically," he said in a recent interview.

"If it maintains, though, into the very busy spring season, that's when we'll start to feel it."

Although shippers of live product have diversified markets through the years to the point that China — not the U.S. — is the largest market for live lobster, the frozen market still depends largely on American buyers.

Big U.S. demand for frozen product

About 55 per cent of Canada's export value in lobster is frozen or processed, and three-quarters of that goes to the U.S., said Irvine. A strong American economy has translated into lots of appetite in the retail and food service sectors for frozen lobster tails and meat.

"They've driven up prices for both those products in the last six months. So the question will be how much more can the market take if there's a 25 per cent tax."

Irvine said he believes there could be some room but it wouldn't take long before it starts to have an effect on other parts of the sector, including the shore price.

Although people in the industry are well aware of the impact tariffs could have on price and availability, Irvine said he's not so sure the same can be said about U.S. shoppers.

In an interview with CBC News last November when Trump first discussed tariffs, Lobster Processors Association executive director Nat Richard said the "mutually beneficial trading relationship" between the two countries needs to be driven home.

Richard noted that lobsters caught in Maine are shipped to Atlantic Canada where they are processed and frozen before being sent back to the U.S. to be sold.

'Equally damaging repercussions'

"If this comes to pass — and I emphasize if — it would have severe and far-reaching consequences for our industry, but we tend to forget it would have equally damaging repercussions on the U.S. side as well," said Richard.

Irvine said members of the lobster industry have been working to diversify for 40 years and this situation is another reminder that that work must continue.

Through the years, markets have opened and expanded in China, Europe, South Korea and recently the Middle East. But Irvine said sellers, shippers and processors need incentives to look at markets that might not be as easy to reach as the U.S.

"They're right there, we know them, they pay in U.S. dollars. It's easy. But it's not as easy to sell a container to the Philippines. So we have to find some way to encourage our exporters to take that kind of extra risk or sort of extra push."

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