China announced a 25% tariff on Canadian seafood products, set to take effect on March 20. The list of affected products includes lobster, snow crab, shrimp, sea cucumber, whelk, and prawns. This move comes as a direct response to Canada’s imposition of a 100% surtax on Chinese electric vehicles and a 25% surtax on steel and aluminum. The tariffs are expected to create significant ripples across the seafood industry, impacting exporters and harvesters alike.
In 2023, Canada exported a substantial amount of seafood to China, with lobster leading at $569 million, followed by crab at $300 million, and shrimp at $262 million. These exports accounted for 78% of all Canadian seafood exports to China. The new tariffs threaten to upend this lucrative market, which has been a cornerstone for many Canadian processors.
Industry Response to Tariff Threat
The Lobster Processors Association, which represents 25 processors in New Brunswick, Nova Scotia, and P.E.I., is bracing for challenging times ahead. The Nova Scotia Seafood Alliance, representing 135 shore-based processors and shippers, echoes this sentiment.
“This is going to present itself as a challenge, there’s no doubt,” said Vascotto, emphasizing the impact on the industry.
The Tangier Lobster Company Ltd., situated close to the Halifax Stanfield International Airport, stands as a leading exporter of live lobster to 13 countries. Over the past 40 years, the company has diversified its export markets, a strategy that might buffer some of the tariff impacts. However, the broader industry remains vulnerable.
“Whether we have a tariff or not we will continue to supply the market … but obviously there is a concern that it will affect the marketplace, it could weigh on demand,” Richard mentioned.
The tariffs are expected to affect the supply chain from top to bottom. Price volatility will likely challenge every segment of the industry.
“Essentially the landscape has fundamentally changed. The announcement is yet another clear demonstration that we’ve seen over the last few months that trade actions have reactions,” Vascotto explained further.
The timing also complicates matters as the U.S. tariffs on Canadian seafood remain paused only until April 2. These tariffs could potentially affect 80% of frozen lobster exports to the U.S., adding another layer of complexity for Canadian exporters.
“It’s substantial to say the least and it comes at a time when we are already being targeted under American tariffs,” Lamont stated.
Adapting to these new tariffs is no simple task. Companies will need time and resources to pivot effectively.
“All of those things take time, money, marketing and creativity, so the pivot is more challenging than people might think,” Lamont added.
Author’s Opinion
The new 25% tariff on Canadian seafood products is a serious blow to an already struggling industry. With existing tariffs from the U.S. and now this retaliatory action from China, Canadian seafood exporters are facing a volatile and uncertain future. The challenge for businesses will be finding new markets and adjusting their strategies quickly to survive these economic pressures. However, the true impact may depend on how well the industry adapts and whether it can mitigate some of these effects through diversification.
Featured image credit: Vitya_maly via GoodFon
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