The U.S.-China trade war has generally been bad for business, according to Wells Fargo Securities Managing Director and Senior Economist Tim Quinlan. Now, after 18 months of reciprocal tariff increases, a clearer picture of winners and losers has begun to emerge.
Mostly, there have been losers, Quinlan said, while speaking at the Global Seafood Market Conference in Orlando, Florida, U.S.A. on Wednesday, 22 January.
“I think of the trade war as kind of a circular firing squad,” Quinlan said. “The biggest net losers so far have been the Chinese specifically and the manufacturing base in the United States. If you had to pick a winner, I would probably go with Vietnam.”
A Wells Fargo study of imports into the U.S. shows that good shipped from Vietnam have grown “incredibly,” Quinlan said. Even with some evidence Chinese goods are being transshipped through Vietnam to avoid U.S. tariffs, Vietnam has gained a lot of seafood processing work and is enjoying an economic uptick thanks to its more favorable relationship with the U.S., compared with China, he said.
The recently-signed “Phase One” trade deal is a positive step toward de-escalation, but won’t have a sizeable effect on alleviating the harm caused by existing tariffs, Quinlan said.
“The idea that somehow the ‘Phase One’ trade deal negates what we went through last year is a total misnomer,” he said. “The best thing that can be said is it’s no longer getting worse. There’s really not a folding of the tents on the trade war. The vast majority of those tariffs are still in play, though I’ll be the first to admit they’re in another round of negotiation now, but that still presents a bit of a headwind.”
In a separate presentation, Jim Anderson, a professor at the University of Florida and the director of the university’s Institute for Sustainable Food Systems, noted the U.S. lobster sector has been another big loser in the trade war.
While U.S. lobster exporters were able to add 1.1 million pounds of new exports to countries other than China, it was not nearly enough to make up for a 26-million-pound loss in sales to China. Overall lobster sales from the U.S. to China dropped 46 percent in 2019, he said.
“It just goes to show the trade tariffs with China have had a significant impact on this market,” he said.
China’s tilapia exporters have also felt the pain, losing more than 28 million pounds of frozen fillet sales to the U.S. in 2019 over a year prior. But U.S. buyers were able to purchase 8.8 million additional pounds of frozen tilapia fillets from countries other than China in 2019 than 2018, signifying they had been able to diversify their sources of tilapia.
“They were able to increase imports of tilapia from Indonesia, South America, and other places,” Anderson said. “While that may be a different product at a different price-point, it appears their overall loss wasn’t as bad.”
The comparison shows the benefits to a diversification in suppliers, he said.
“In seafood, it’s often possible to shift suppliers away from a place faced with tariffs to other places, so you’re able to have not as dramatic of a hit as other proteins,” he said. “On the other hand, if your sourcing is very specific to one place, by choice or by necessity, tariffs can cause a major problem.”
Anderson said seafood companies have become aware of the advantage of diversification and that has helped the industry as a whole.
“I think seafood has gotten a lot more nimble in terms of its reach and global sourcing than a lot of other industries,” he said.
Photo courtesy of Cliff White/SeafoodSource
