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The Effect of the Lobster Tariff on Maine Businesses

It’s early in the morning for lobsterman and former TA Student Nick Beaudoin, as he starts his day at the pier at 4:00 AM.

Nick Beaudoin off the coast of an island.

“I started by myself hauling 10 traps by hand my first summer out of a 17-foot boat,” said Nick. “Then 75 the next and then 150 the next.”

Nick Beaudoin graduated from Thornton Academy last year as part of the class of 2018 and now enjoys his work as a Maine lobsterman. Any day that he hauls, he usually spends between fourteen to nine hours at the pier, from 4:30/9:00 AM to 5:00/6:00 PM.

Nick wanted to start lobstering because, as he said, “I’m my own boss and I don’t make money unless I work so it fuels me. Every day the boat sits on the mooring, that’s money missed and I love the fact that if I build and set the trap and catch that lobster, I truly did 100% of the work.”

Nick Beaudoin in his boat off the coast of Wood Island.

Lobsters are one of Maine’s most prominent exports and a very popular business in Maine. However, because of some recent events, one of Maine’s biggest customers for lobster, China, has looked away from buying from Maine.

It started on July 6, 2018. Tariffs that affected $34 billion worth of annual trade of products between China and the U.S. came into effect. U.S. President Donald Trump imposed these 25% tariffs on these Chinese goods because he said they were “essential to preventing further unfair transfers of American technology and intellectual property of China, which will protect American jobs.”

China said that they would retaliate with an additional 25% tariff on over 660 U.S. products worth $50 billion. The U.S. warned back that any Chinese retaliation would be met with the imposing of more tariffs.

China responded with $34 billion worth of tariffs on U.S. goods on July 6, and Trump responded with proposing a 25% tariff on Chinese imports worth over $200 billion.

So what is a trade war and why did it start? What is a tariff? A trade war is when countries attack each other’s trades with taxes. A country will put a tariff on products from one country, causing the other to respond and continues with the escalation of adding more tariffs. To help further explain this topic, Thornton Academy economics and history teacher and class of 2010 graduate Thomas Quentin helped elaborate these details.

According to Mr. Quentin, “A tariff is a tool that a government often uses to protect domestic industries.” The intention of adding tariffs to each other’s imports is to boost the economy of their own country by having their people buy cheaper products from their own country than buying the more expensive products from another.

One of many lobstering boats not far from the docks in Kennebunkport on the Kennebunk River.

Tariffs can have a negative impact on the American consumer though, according to Mr. Quentin. He said, “Chinese goods (of which we import hundreds of billions of dollars) will become more expensive for Americans to buy. Because Chinese goods become less competitive in the American market, American firms will have less incentive to produce efficiently and offer consumers low prices.”

President Trump’s intention of this trade war was to end the trade deficit between the U.S. and China. A trade deficit is a difference between how much you sell and buy from a certain country, which with China has to reach $375 billion dollars this year.

However, imposing these tariffs may hurt businesses based in the U.S. that rely on trade with other countries, like China, for parts. Businesses like the automobile industry, boat making industry, and even lobstering industry, may face some rough economic time after losing China, a stable and reliable trade partner.

Owner of The Lobster Co., Stephanie Nadeau has felt  the impact of the lobster tariffs first hand.

The Lobster Co. Fish Market Sign outside of their location in Arundel.

It all started with a three-week warning of the tariff to be put into effect. “We had to get rid of some of the employees,” she said. “Basically we went from shipping 70 orders a month to none.”

Maine and Canada have identical lobsters. Everything would be a different story for the lobster industry if we had different lobster from Canada. But because our lobsters are identical, China has switched to buying from Canada instead of Maine.

Nadeau explained,  “[China] has to pay tax on U.S. lobster, but what happened this year is that the Canadians came down and bought U.S. lobsters from the fishermen and they got to ship them without paying the tax. If I got them from the fishermen, I’d have to pay the tax, and this isn’t actually legal but they’re doing it anyway and no one seems to care.”

Outside of The Lobster Co., run off Portland Rd in Arundel.

She said as long as they can do that with the lobstermen, the lobstermen won’t be as impacted as much as one would think, which matches up with what Nick Beaudoin said, “Tariffs won’t [impact Maine businesses]. 90% of Maine lobster is shipped to Canada, rebranded as Canadian lobster and is sent over.”

According to an article from the Bangor Daily News, Canadians bought $43.72 million worth of lobster from Maine in July and sold close to 60% more lobster to China than in previous years, because of the tariff.

“I sold probably 35% of my lobsters to mainland China. There’s no one to replace China. So 35% of my business just got vacuumed out of here,” said Ms. Nadeau.

Here, these employees are working hard in the heart of the Lobster Co.

With the way events have been playing out, this trade war with China may continue to escalate and Lobster businesses may have to fight to continue their businesses.

Looking forward to the future, Mr. Quentin said, “I hope that our policy-makers will be able to look at things objectively once some time has passed and determine whether continuing a trade war with China is an appropriate course of action.”

When asked about future plans for her business, Ms. Nadeau said, “I hope that in the future, China and the U.S. end their trade war. But if this continues to go on, there’s nothing I can do.” She said that she believes as this trade war continues to go on, it will actually make the consumers not want to buy Maine lobsters.

“It’s one thing for the dealer or importer over there to pay extra taxes or whatever,” she said, “but if the consumers turn away from buying them, or the Chinese government doesn’t even let them in even with the tax… I’m completely helpless here!”

She hopes that in the foreseeable future, our representatives will bring up this issue with Maine lobstering, as it is not one problem that will only affect Maine but could grow worse and worse as this trade war continues.

“[Our representatives in Congress] might have been effective in communicating [the problem], but no one cares,” said Ms. Nadeau. “They don’t care if people here go out of business, it makes no difference.”

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