China slams Alaska and US Seafoods with 25% Tariff on $1 Billion in Imports

SEAFOODNEWS.COM  [SeafoodNews] by John Sackton – June 15, 2018

China wasted no time retaliating against President Trump’s trade war. The US seafood industry has been hit hard.

China will impose 25% punitive tariffs on a range of US seafood exports worth nearly $1 billion in 2017.

The tariffs will go into effect on July 6th. They are calculated as 25% additional tax on the imported cost of the product, including any previous tariffs.

So if a dungeness crab product was taxed at 12%, the 25% will be on the total cost, ie import cost plus previous tariff.

Virtually no important US seafood product was left off the list.

The tariffs will hit pink salmon, chum salmon, frozen cod, frozen pollock, all flatfish, sockeye salmon, atka mackerel, herring, sablefish, geoduck etc. etc. A full list of the top 25 species hit by the tariffs is at the end of this story.

In 2017, the seafood exports subject to this tariff were worth $987 million.

Using 2017 figures, the value to Alaska of the products hit by the punitive tariff is more than $750 million.

For the West Coast, Dungeness crab , Hake, Geoduck, coldwater shrimp are all hit.

In Maine, live and frozen lobster are hit as well. This will have an immediate impact on the live lobster market, shifting even more Canadian product to China, and leaving the US at a disadvantage in both the Chinese and European export markets, where Canada already has duty free access.

The ramifications are very serious for Alaska as well. All the Alaska products that go to China for reprocessing, such as pollock, cod, and pink salmon, will be subject to the 25% tariff.

The cost of these tariffs will hit the seafood industry, because ultimately there is little choice but to continue to send these products to China. China has become the de facto export destination for virtually all seafood reprocessing done overseas.

When the US imposed tariffs on Chinese solar panels, the Chinee government stepped in to eat the increased cost. As a result, the Chinese companies selling solar panels are still selling them in the US.

There is little chance of our industry getting the same support. So through absolutely no fault of our own, most companies will see a big hit to their bottom line, because they will have to agree to lower prices in order to maintain marketability in the face of this 25% increase in costs.

Is there a silver lining? The only positive response I can see from this is the potential to process more fish in Alaska. However, most plants there are near capacity, labor issues abound, and many plants in both salmon and groundfish have reconfigured themselves to freeze and export products, not to fillet and do final packaging.

For the lobster industry, I see no positives whatsoever. Lobster prices have already been coming down, and taking away a major US export market will mean the US domestic lobsters are far more restricted than Canadian lobsters.

China is also the main market for specialty seafoods like sablefish and geoduck. Again, these items will face an immediate 25% tax – pushing up their cost in China.

All in all, this represents the worst outcome feared by the industry. The Chinese are deliberately targeting smaller industries that have little ability to fight back, much as other countries hit by US tariffs are targeting specialty items like bourbon or motorcycles.

In the overall picture, soybeans are the big shoe here. China is the primary market for this crop, one of the largest produced by American Farmers. It was also on the list of tariffs announced today, along with pork. 

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