Business

Steel tariffs make lobster traps more expensive. Lobster tariffs make the traps harder to buy

NORTHBRIDGE — Every month, Jim Knott Jr. orders at least a thousand tons of steel rods for his wire factory here in the Blackstone Valley. But the shipment from Canada that arrived in June carried an unwelcome addition: an extra charge of $54,000 to cover a new tariff President Trump imposed on foreign steel as part of his aggressive trade policy.

The next shipment of imported steel cost Knott thousands of dollars extra, too. The whopping increase in costs has put Knott in an impossible position: His company, Riverdale Mills, processes the steel rods into coated wire mesh that is used to make most of the commercial lobster traps in the United States. Suddenly, Knott had to choose between eating the 25 percent surcharge or raising his prices and risking losing customers to cheaper foreign competitors.

For now, Knott has decided to eat the extra costs. But as Trump wheels between confrontation and negotiation with US trade partners, Knott said he is not sure how much longer he can hold the line.

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“You should always judge a policy on its outcome, not its intent, and I’m starting to see a very bad outcome,” Knott said. “In the end, the consumer is going to end up paying the price for these tariffs. They may not realize it at this time.”

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The simple, sturdy lobster trap is a microcosm of a global supply chain at the mercy of a tit-for-tat trade war among the world’s leading economies. Knott sources his steel from all over — within the United States, and from Canada, Europe, and other foreign suppliers. The tariffs are supposed to prod him and other producers to buy US-made steel, but that isn’t much of an option: Prices for domestic steel have risen sharply, and Knott said there is a three-month wait for a shipment from a US mill.

Meanwhile, his customers in New England risk being squeezed at both ends. Not only do they face higher prices for materials from Riverdale, they are already being hurt by a retaliatory tariff that China slapped on US lobsters, cutting into their exports to that important market and, with an oversupply, contributing to a steep drop in prices.

“The tariffs have wider-ranging impacts than just selling lobsters on the market,” Wade Merritt, president of Maine International Trade Center, said. “This is also about the livelihood of some of our communities where the lobster industry underpins the town.”

Commercial traps made with Riverdale wire mesh can retail anywhere from $45 to $200, depending on size, with $80 being about average for a typical medium-sized trap. One loyal customer, Gloucester lobsterman Cesare Cromosini, has been building his own traps with Riverdale wire mesh for more than 10 years.

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Lobstermen typically restock their gear in the fall for the next fishing season. But Cromosini said he plans to soon put in an order with Riverdale to build at least 200 more traps, before prices go up.

“Riverdale said the price isn’t going up right now, maybe in the future, but who knows?” Cromosini said. “It does hurt us if the price goes up, but we have no choice.”

Brian Boucher moved zinc ingots toward a galvanizing tank inside the Riverdale Mills factory.
Matthew Healey for The Boston Globe
Brian Boucher moved zinc ingots toward a galvanizing tank inside the Riverdale Mills factory.

That sense of frustration and helplessness is evident across the industry, and, among fishermen in particular, is reinforced by the drop in wholesale lobster prices that they attribute to the trade war.

“It’s a double-edged sword,” Rockport lobsterman Bob Morris said. “It’s very difficult for a person who catches lobsters to be involved on what’s going in the world market. . . . It’s always the farmer or fisherman who ends up paying.”

Yet despite the hit to his livelihood, Morris is supportive of Trump’s trade goals, saying he hopes the hard-line policy results in “putting American workers in a better position.”

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“I hope this hurt will end up to a better place in the future,” Morris said. “If not, I’ll stand corrected that I was wrong in supporting the tariffs.”

The tariffs have put many US companies in the same boat. Major companies from Alcoa to General Motors to Whirlpool have reported higher costs; Coca Cola said it raised prices on carbonated soft drinks, in part because of the higher aluminum costs associated with the tariffs.

Trump has tried to mollify some parts of the country upset over the tariffs — the Farm Belt in particular. The administration has proposed providing $12 billion in aid to US soybean farmers hurt by China’s retaliatory tariffs. Knott said that isn’t a solution.

“Manufacturers and farmers aren’t going to prosper on welfare,” Knott said. “I’d rather see people produce, export, and open the trade markets rather than having these tariffs continue. I’d rather see trade than aid.”

The Knott family got into the wire business in a roundabout way: His father, an engineer and inveterate inventor, grew up fishing for lobsters, and he noticed how much time professional lobstermen spent repairing the classic traps made of wood and rope. The family would spend summers in Gloucester, and the elder Knott began experimenting with wire mesh and PVC to produce a more durable trap.

He turned his hobby into a business: In 1980 he bought an abandoned paper mill tucked along a bulge of the Blackstone River and started Riverdale. The 19th-century factory building has a rustic charm to it — burnished wood floors that creak and sturdy, exposed brick.

The factory floor is a blur of motion, sound, and color — forklifts whirling and beeping, with gray rolls of wire to one side, PVC-coated sheets in bright yellow, red, and other hues at another. Heavy machinery processes the steel rods down to a thinner bore, pushing out huge coiled rings of wire that bounce like an oversized slinky.

Roughly 85 percent of all lobster traps in the United States are made with wire mesh from Riverdale Mills. Lobstermen can be particular about the color of the mesh; yellow and green tend to be popular, their brightness making it easier to spot the traps in deep water. Some are superstitious, Knott said, believing certain colors bring in better catches.

Riverdale also supplies material for security fences and agricultural and construction uses. Knott said 45 percent of his sales are to overseas customers, and he worries about losing those buyers if the United States and other countries do not walk back from the intense trade-war talk.

“With the tariffs in place, it makes it difficult for us to continue to compete in a global market space like we’re currently doing,” Knott said. “We need low-cost, high-quality inputs to continue that export business.”

For now, Knott has been able to offset his high steel costs with savings from a new energy system. But he’s frustrated that the tariffs are taking away from his ability to invest more in his employees and new equipment. Riverdale has around 185 employees and doesn’t plan on making any layoffs.

Knott’s forbearance has so far spared one of his big clients, Brooks Trap Mill in Thomaston, Maine. The trap builder buys at least 45,000 pounds of wire mesh from Riverdale weekly, even more during peak lobster season, paying about $50,000 for each load.

The Brooks family has been buying from Riverdale since it began operating. It also has two foreign suppliers, one in Italy, another in China. They cost about the same, but co-owner Mark Brooks said it’s much easier and faster to get a load of wire mesh from Riverdale, plus it’s a “great product that holds up well.”

If prices for lobster keep falling, however, Brooks said the whole industry, from lobstermen to the mill that provides their gear, will suffer.

“If the Chinese lobster market gets hurt by the tariffs, that will affect us a great deal,” Brooks said. “It’ll affect the prices lobstermen get for their product, and they’re not going to want to spend extra on their gear. That’s the killer for us.”

Alex Gailey can be reached at alexandra.gailey@globe.com. Follow her on Twitter @alex_gailey.