Groton's Garbo Lobster hit by U.S.-China trade war

Chris Archuleta, left, and David Dozier, second from left, employees at Garbo Lobster in Groton, grade lobsters for shipping on Thursday, Aug. 9, 2018. Garbo Lobster has seen sales to China and the European Union dry up since Trump administration tariffs kicked in recently.  (Sean D. Elliot/The Day)
Chris Archuleta, left, and David Dozier, second from left, employees at Garbo Lobster in Groton, grade lobsters for shipping on Thursday, Aug. 9, 2018. Garbo Lobster has seen sales to China and the European Union dry up since Trump administration tariffs kicked in recently. (Sean D. Elliot/The Day)

Groton — On any given summer day, Groton's Garbo Lobster receives and ships out up to 70,000 pounds of lobster. During holiday seasons — including Christmas and Chinese New Year — the longtime distributor cranks through 90,000 to 125,000 pounds per day.

"It's a spectacle," Garbo Lobster General Manager Chris Brown said Thursday morning, surrounded by a crew moving crate after crate of crustaceans between pallets and underwater storage containers.

But like other lobster merchants along the East Coast, Garbo Lobster fears that spectacle could fade as a trade war boils over between the U.S. and China.

Less than five weeks since China matched the U.S.'s 25 percent tariffs on $34 billion worth of goods, including seafood, Garbo Lobster President Dave Garbo offered a blunt assessment of the situation: "The tariff is putting us out of business."

The day after China's retaliatory tariffs went into effect in early July, Brown and Garbo noticed Chinese distributors canceled every order.

"It was like a light switch," Brown said. "Overnight, we got the phone calls to cancel."

Those orders, which have been consistent for years and lead to shipments of up to 150,000 pounds of lobster to China per week during the Chinese New Year, haven't returned.

Garbo said his company can sell lobster to China for roughly $9 to $12 per pound, which includes shipping and fees, and varies according to the season and market fluctuations. But Chinese buyers don't want to pay at least an extra two bucks generated by the tariffs, Garbo said.

Both men added that the escalating trade war pushes Chinese distributors to buy from Canadian merchants, because China recently lowered its Canadian lobster import tariff by 7 percent.

While Garbo Lobster still ships to Vietnam, Korea and Europe, Garbo said his business can't survive if the market in China is choked off completely.

Brown said the company delivers to retailers and markets from New Jersey to Massachusetts. Most of the product passing through Groton this season comes from lobstermen who deliver to Garbo Lobster's facilities in Maine and Nova Scotia.

President Donald Trump this week doubled down on punishing China for what he describes as unfair trade practices. The federal government accuses China of using predatory tactics and cybertheft.

Tariffs on another $16 billion of goods imported from China will begin Aug. 23, the Trump administration announced Tuesday. The Associated Press reported the goods include industrial products such as steam turbines and iron girders.

The Chinese Commerce Ministry said it will retaliate in kind, arguing in a statement that the United States "once again put domestic law above international law by imposing 'very unreasonable' new tariffs on Chinese goods," the Washington Post reported Wednesday.

U.S. Rep. Joe Courtney, D-2nd District, who sat with Garbo and Brown on Thursday morning to get a sense of how the trade war is impacting business, said bipartisan frustration over the tariffs was "bubbling up," especially in coastal districts relying on seafood exports. 

Courtney noted that in addition to seafood, the back-and-forth tariffs are hitting soybean, dairy and pig farmers across the country, along with a host of manufacturers and industries including aluminum, steel and newsprint.

The Trump administration last month announced $12 billion in aid to farmers hit by the trade conflict.

Courtney acknowledged that the World Trade Organization takes too long to resolve trade disputes and the remedies often aren't strong enough.

"The way to deal with that is to fix the WTO and I think you have the European Union totally on board in terms of a reform agenda," Courtney said. "Tariffs are a unilateral mechanism that is high risk in terms of triggering what we're seeing here. We lose any consensus with EU and Canada. We've got issues but we should not be at each other's throats."

b.kail@theday.com

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