HONG KONG, China - The Donald Trump administration's next round of tariffs against Chinese seafood is not yet final or in effect but it's already caused a collapse in orders by the US, industry sources tell Undercurrrent News.
Farmed warmwater shrimp. Photo: Undercurrent News
The US Trade Representative could any day enact the tariffs it proposed on a 205-page list of Chinese imported goods estimated to be worth more than a combined $200 billion, including multiple seafood items, such as re-processed salmon and tuna as well as red swimming crab. The tariffs were earlier predicted to go into effect at the beginning of October.
Likewise, it remains unknown whether the administration will levy its initially proposed 10% rate or the 25% rate it suggested later.
Regardless, Chinese seafood company executives told Undercurrent on the sidelines of Seafood Expo Asia, in Hong Kong, this week that -- owing to the time it takes to process and make deliveries -- US buyers fear their shipments wont arrive in time and have stopped making orders.
“In essence, the tariffs are already in effect,” Leo Xie, sales director at Guangdong Evergreen Group, told Undercurrrent.
Dalian Athena, which processes wild salmon harvested in Alaska and Russia, described the complete absence of orders from the US during this normally hectic time of year.
The firm, which supplies the likes of Walmart and Aldi, typically enters negotiations for its salmon fillets between late July and early August, when the short two-month wild salmon harvest in Russia and Alaska peaks and US retailers ink supply deals for up to a year.
Tina Wang, sales manager at Dalian Athena. Credit: UCN
“All the supermarkets with long-term steady orders are normally talking at this time,” Tina Wang, sales manager at the firm, told Undercurrent. “This year is not the same; the Chinese plants have booked the raw material, but we haven’t got the final production order.”
Her firm typically sends 100 containers of processed pink salmon fillets to the US annually, or one-fifth of the firm’s total exports. At roughly $90,000 per container of salmon, that’s $9 million worth of business at risk, she said.
For many firms in Dalian, one of China’s biggest seafood processing hubs, handling whitefish, groundfish, pelagics, and mollusks worth hundreds of millions of dollars in value a year, the picture is much the same, she said.
“Actually, everyone in Dalian is a little panicked," she said. "But there's nothing we can do. We can only wait.”
She said if orders don't come through, there will "certainly" be a drop in production, which will in turn mean less purchasing of fish from Alaska or Russia.
Raw materials are ordered on credit, she noted. Earlier this month, Undercurrent reported Dalian processing plants were facing a credit squeeze because of local banks' worries about US tariffs.
Meanwhile, US orders for tilapia fillets, China’s biggest single seafood export by species, started to dry up in mid-August, according to Xie.
This followed the announcement by the Trump administration that it was increasing its proposed tariff rate increase on Chinese goods from 10% to 25%. "When the proposed tariffs were 10%, in mid-August, from around the 12-13th, I was talking with customers about how we could manage it; 99% of them were on board, saying they could manage the tariff," Xie said.
Leo Xie, sales director at Guangdong Evergreen Group. Credit: UCN
“But then suddenly Donald Trump said he’d increase the tariffs to 25%. Buyers said if you can't ship product which arrives in the US before the end of September, don't send it.”
The firm, one of China’s largest aquaculture companies, ships around 1,500 containers of tilapia fillets annually, worth about CNY 640m ($93.6m) in export revenue. Roughly 80% goes to the US.
In August, John Connelly, president of the US' National Fisheries Institute (NFI), visited Guangdong Evergreen's headquarters in Zhanjiang, Guangdong province, to discuss the impact of the tariffs, according to Xie. Connelly talked for an hour with Chen Dan, president of Guangdong Evergreen, and also met local tilapia farmers.
"He came to understand the impact of the tariffs here," said Xie.
NFI was among several industry organizations which argued for a de-escalation of the trade war with China during a six-day hearing held by the USTR, in Washington, D.C., citing the pain it would also inflict on US consumers and fishermen. Robert DeHaan, NFI's VP of government affairs and general counsel, joined more than 300 others who testified about how the new tariffs would hit US businesses as well as foreign exporters.
Looking to other markets
China’s huge fishing industry also has been impacted.
Zhejiang Ocean Family, a firm based in the fishing hub of Zhoushan, supplies US canned tuna seller Bumble Bee Foods 10,000t of cooked tuna loins annually.
Zhejiang Ocean Family tuna processing facility in Zhoushan, China. Credit: UCN
"We've worked with Bumble Bee for a long time,” Fang Zuyue, a senior executive, told Undercurrent during a recent visit to the firm’s Zhoushan headquarters. “I think it would be hard for them to find that kind of volume quickly from a new processor."
Previously, sources told Undercurrent the tariffs would “devastate” China’s growing export business to the US.
The list of seafood companies in China impacted goes on.
Red swimming crab firm Daishan Tongqu Aquatic Food, which processes 7,000-8,000t of the species from the East China Sea, told Undercurrent it has enjoyed stable relationships with buyers in the US -- its largest single export market -- for more than 10 years. Now, customers are “very worried”.
"A 25% import tax? They [US buyers] can't accept this additional cost," Han Bo Zhou, vice general manager at the firm, told Undercurrent.
He said the company would try to keep sending product to the US to maintain a market foothold but is looking to other markets, such as Hong Kong and Singapore. “We are very worried. But we will work harder, dig deeper,” said Han.
Ironically, NFI's Red Swimming Crab Council only last month confirmed its support for a sustainability project for Zhangzhou's red swimming crab fishery, in partnership with local firms and industry associations. The council's financing depends on importers paying a small levy on imports of crabmeat.
Meanwhile, Yantai Honghua Seafoods counts the US as a key market for exports of processed Japanese flying squid, or Todarodes japonicus. While this season's catch has so far been “extremely bad”, according to a spokeswoman, tariffs of up to 25% will only make matters worse for US importers.
What happens next?
It still remains to be seen if the tariffs will be implemented.
At the Hong Kong show, talk among Chinese seafood was of the US finalizing the list of products targeted for 10-25% tariffs, either on Wednesday or Thursday. At the time of publication there was no news, however.
The overwhelming sense was of an industry entering uncharted territory.
A tilapia pond in Hainan. Credit: UCN
Xie, who lived in Houston, Texas, and works with some of the largest retailers and foodservice customers in the US, swung from hope buyers will keep with tilapia to visions of the collapse of the country’s huge tilapia industry, which last year produced over 1m metric tons of fish, according to Chinese statistics.
"Come November it could be that US buyers turn to Chinese tilapia again despite the tariffs. They'll just pass on the extra cost to US consumers,” he said.
Another source put it somewhat differently.
“Donald Trump said he wants to bring jobs back to America, but it's cutting fish on a table. Americans don't want to do that shit," the source said.
Contact the author louis.harkell@undercurrentnews.com
