Seafood industry smart to keep eye on US-China trade skirmish : Apr 2, 2018
Jason Huffman : UndercurrentNews
Count Western Edge Seafood’s long-time procurement manager Don Kelley among many in the seafood industry who will be watching with interest when the Donald Trump administration identifies the Chinese products for which the US will charge a combined $60 billion in new tariffs on April 5.
That’s the day that roughly matches the US Trade Representative’s promise, made on March 22, to deliver such a list within 15 days as part of the attack on China for violating intellectual property rules.
Kelley doesn’t expect to see any of the handful of products his Pittsburgh, Pennsylvania-area seafood company imports from China on the list, including tilapia, cod, pollock and haddock, as there are few intellectual property issues when it comes to fish. But, like the rest of the seafood industry, he’s just not certain how far things will escalate.
“Hopefully they’ll just leave seafood alone,” Kelley told Undercurrent News.
The US seafood industry has been abuzz since the administration’s tariff threat and China’s next-day (March 23) response of listing 128 US products, including several agricultural goods, that it would slap with tariffs in response. On Monday China re-released its list, this time with specific tariff amounts that it said were now in effect. It includes a 25% tariff on pork products and aluminum and a 15% tariff on almonds, apples and berries to name a few.
Seafood is not on China’s list.
Still, there’s good reason for the seafood industry to remain concerned about the building feud.
China is the US’ second-largest source of seafood imports behind Canada, accounting for $2.7bn worth of products in 2017, based on data from the National Marine Fisheries Service (NMFS). That’s up from 2016 when China seafood exports to the US were worth $2.6bn. Canada sold the US $3.3bn worth of seafood in 2017 by contrast.
Tilapia led all species entering the US from China in 2017, accounting for $426m worth of imports, while shrimp importers finished second with $335m worth of goods entering the US from China.
Alaska salmon, Maine lobster sellers have much to lose
Similarly, the US counts on China, more than any other country, to buy its seafood products — $1.3bn worth in 2017. That’s up from the $1.0bn worth of US seafood bought by China in 2016.
Alaskan seafood producers are among those with the most to lose in a trade spat. Their pink salmon was the most valuable of all the US seafood commodities sent to the People’s Republic in 2017, accounting for $171m in sales, while chum salmon was worth another $93m, based on an Undercurrent review of NMFS data.
Cod ($146m) and pollock ($121m), two more Alaskan products, also accounted for a large percentage of US seafood exports to China.
“China is the biggest customer of Alaska seafood, buying over $796m of our products last year — more than any other country and an increase of 27% from 2016,” noted Doug Griffin, executive director of the Southwest Alaska Municipal Conference, in a recent column for the Juneau Empire.
Bill Walker, the state’s governor, will no doubt promote seafood when he visits China in May, according to Xinhua, the communist nation’s news service.
Much of the fish that is sent to China is processed and returns to the US or is sent to other Asian countries, and the Chinese plants have other options, observed Garrett Everidge, an economist with the McDowell Group, an Alaska-based research and consulting firm.
“So, if I’m a Chinese plant manager, I’m sourcing seafood from all over,” Everidge said. “If I’m sourcing pollock, I can source pollock from the US or I can source pollock from Russia. If I have a salmon production hole I need to fill, I can used wild Alaska salmon or I can use farmed salmon from somewhere else.”
The Alaskan Seafood Marketing Institute and the Pacific Seafood Processors Association both told Undercurrent News they were hearing from concerned members and keeping watch of the situation.
Likewise concerned is the US lobster industry, which is increasingly counting on China to buy its product. Last year, the country known as “the sleeping giant” bought $142.4m worth of lobster from the US, including rock lobster, according to NMFS. That’s up from $108.2m the year before.
Tom Adams, the founder and CEO of Maine Coast Lobster Company, in York, Maine, told Undercurrent in a recent interview for another story that he was keeping a watchful eye on trade tensions. He counts on Asia, and chiefly China, to buy about half of his 7m lbs of lobster sold annually.
“I don’t want to get into politics, and our stance of America first is great and I support that but, as an exporter, it sometimes lends toward an unfriendly look toward us as we are trying to do business with many other countries,” Adams said at the time. “That and currency exchange are things we watch very closely.”
Later, he added: “We hope for positive and fair trade agreements to be negotiated between the US and foreign nations like China. We have wonderful customers in those regions that we want to be able to continue to provide our products to that serves the business needs of both sides.”
‘This is Trump brinkmanship’
Polar Bay Foods, in Bellevue, Washington, is another company that has reason to care about trade relations with China, as it exports halibut, flounder, pollock and salmon, sourced from Alaska, to China for processing. But Julia Ying, the president of Dalian Meihe Foodstuff Co., Ltd., Polar Bay’s Chinese-based parent company, said she isn’t too worried yet.
“I do not really feel like seafood could be put on the table as a target because, compared to the other items, it is too small, so far,” she told Undercurrent, adding: “But people really care about what happens next, because China is a major processor for the whole world, especially the US market.”
Jim Gulkin, the founder and CEO of Siam Canadian Group, a company that specializes in importing shrimp from Asia and maintains offices in six Asian nations, agrees. While China’s contributions are large in relation to the seafood imported by the US, they are small when compared to other products imported by the US from China, he told Undercurrent.
In an opinion piece for Forbes, writer Ralph Jennings suggested the four types of Chinese imports that were most likely to get hit by Trump’s new tariffs: consumer electronics; tires and rubber; automotive goods; and machinery.
However, having witnessed recent moves to place Vietnamese pangasius under the domain of the US Department of Agriculture and to require imported seafood to deal with more recordkeeping requirements, Ying warned that a group of politically motivated legislators could make a push to embroil Chinese seafood in the trade fight to the benefit of their domestic seafood-producing constituents.
Tariffing or blocking Chinese seafood is something Trump could do that “would play well to his constituency, including the southern states, who he promised to protect from foreign unfair practices,” Gulkin added.
Another figure of influence to consider when watching the Trump administration’s trade moves is Wilbur Ross, the US Commerce Department secretary. He’s been vocal since before taking office about his desire to improve the seafood trade ratio, frequently noting how more than 90% of US seafood is imported, and brought it up again at a recent congressional hearing.
“It’s one of my pet peeves,” he said, when asked about it by U.S. representative Steven Palazzo, a Mississippi Republican. “I hate the idea that with all the water surrounding us and all the water inland that we have a trade deficit in fish. I’ve been putting a lot of pressure on the fisheries management group at [the National Oceanic and Atmospheric Administration] to try to deal with the situation.”
But Gulkin believes both sides will settle their differences before the seafood industry gets thrown into the fray.
“This is [Donald] Trump brinkmanship,” Gulkin said. “And China doesn’t want this trade war either, I think.”
“Xi Jinping has made himself president for life and in order to consolidate his power he is going to need a strong economy to keep his 1.3bn people happy,” he said. “So he doesn’t want something that’s going to be a major disruption to the economy of China.”