The Alaska seafood industry is trying to figure out what the tit-for-tat tariff situation with China will mean to a previously promising trade relationship.
One thing seems for sure – the tariffs add another dose of uncertainty to an industry that is already subject to everything from fluctuations in fish stocks to opaque market factors. And it’s bad timing.
China is already Alaska’s largest export market for seafood products, and Qiuijie Zheng, a Chinese-born economist and assistant professor at the University of Anchorage, Alaska, says now is the time for Alaska to target the growing middle class with up-market products like salmon and crab.
“Right now, China is still a developing country, and consumers are still building their preferences. It’s quite important to take advantage of the moment, but if we have tariffs, we’re going to lose the opportunity for this emerging economy,” said Zheng.
In a back-and-forth with the U.S. President Donald Trump’s administration, China announced in June a 25 percent tariff on Pacific Northwest seafood products consumed in their domestic market. Zheng’s consumer studies in China indicate that Chinese shoppers are drawn to wild-caught fish from pristine waters, but it’s not internalized – the market is flooded with farmed Norwegian and Chilean fish that is cheaper, and could be even more inexpensive with the newer tariffs.
The Chinese tariff in question, which went into effect on 6 July, impacts other finfish caught in Alaska like pollock, cod, rockfish, and flatfish, as well as crab and fishmeal. As a response, the U.S. announced in July its own 25 percent tariff on products processed in China and reintroduced into the U.S. market. That means processed products like fish sticks, salmon, cod, pollock, and flatfish fillets from wild-caught Alaska fish are now more expensive to get back into the U.S. market.
Jeremy Woodrow, the communications director for the Alaska Seafood Marketing Institute, said about USD 2.7 billion (EUR 2.3 billion) of re-processed seafood comes back from China annually, with Alaska seafood representing the majority. While some have argued that this might be a chance to reduce Alaska’s dependence on Chinese processing facilities, Woodrow said building the infrastructure and labor force would take time and money.
“We would love to be able to process more seafood in Alaska, but it would take at least 25 years to build up our infrastructure, and we sometimes even struggle to find the workforce to complete the processing that we do now,” he said.
Considerable time and money has already been invested in building a market for Alaska seafood in China, and it’s working, which makes the trade war even more troubling for a state mired in an economic depression driven by low oil prices.
This summer, Alaska Governor Bill Walker and a trade convoy went to China, a trip that was a response to a trade mission a year ago from Chinese President Xi Jinping.
“We all know that China is one of the fastest growing markets in the world. It’s somewhere that everyone wants to be a part of, so when we have these punitive tariffs, it makes it more difficult for Alaska seafood to compete on a global scale, especially when you see China opening up free trade agreements with other competing countries,” Woodrow said.
Woodrow noted that ASMI is currently working closely with the state government and its federal delegation to draft a letter to the Office of U.S. Trade Representatives regarding these latest concerns.
Competitors such as Russia, Norway, and Chile could step in if Alaska seafood gets too expensive, leaving Alaska on the outside looking in, with no alternative options in sight to replace the massive Chinese market.
“China is the destination for such a significant portion of Alaska's production. I suspect the industry would be able to develop new markets or sell more product into existing markets on the margin. But in the near-term, no market will replace China,” said Garrett Everidge, an economist at the McDowell Group in Anchorage, Alaska.
