A Chinese desire to avoid economic self-mutilation might protect most Alaska salmon from the crossfire of a rumbling trade war between the Asian nation and President Donald Trump, multiple sources have told craigmedred.news.
Millions of pounds of salmon are shipped from Alaska to China to be processed every summer, and a reported 25 percent Chinese tariff on the fish had the potential to create havoc in Alaska commercial fisheries with salmon seasons just beginning in earnest.
But the Chinese make more off the Alaska fish than they pay for them and apparently don’t want to take a sizable economic loss just to make a point with Trump.
China imported about $1.3 billion worth of seafood from the U.S. last year, but turned around and exported about $2.8 billion worth back to the U.S., according to data from the National Marine Fisheries Service.
How much of the export was made up of salmon headed and gutted in Alaska only to be shipped to China to be fileted and stripped of pin bones before being sold in the U.S. is unclear, but the quantity is thought to be significant.
With the Bristol Bay sockeye fishery and major pink salmon fisheries around the state just getting underway, significant Chinese tariffs on H&G salmon as it is called could have seriously driven up costs for processors and thus pushed down prices paid fishermen.
“It would have really been tough in the short-term, especially for some species,” Andy Wink, a fisheries consultant, said Wednesday.
But, he like others, said that everything he is hearing says that H&G Alaska salmon will be spared tariffs, which makes sense given the amount of money China makes on processing and reselling.
The Alaska Seafood Marketing Association said its China office is also reporting the Chinese plan to hold off on tariffs on H&G salmon, and said the same thing was being heard from the Chinese trade partners of fish companies processing in Alaska.
Intrafish, a website focused reporting on the commercial fishing business, this afternoon was quoting officials of the National Oceanic and Atmospheric Administration (NOAA) saying that fish imported into China for “reproccessing and re-export” would be exempted.
Wink added, however, that tariffs could make life tough for small, but growing niche markets for high-end Alaska products in China. Upper-class Chinese “love king crab,” he said. “They love black cod,” geoducks and sea cucumbers.
No one can say how a 25 percent tariff on seafood might affect markets for those seafood products, but added costs are unlikely to boost sales.
Seafood tariffs are but one part of a Chinese reaction to Trump’s June 15 decision to impose a 25 percent tariff on $50 billion in aerospace, robotic and auto industry exports from China.
Trumps said the tariffs were in response to Chinese thefts of intellectual property.
The Chinese quickly hit back with similar tariffs on U.S. agriculture exports, seafood among them. Trump has since upped the ante with threats of tariffs on a further $200 billion in Chinese exports to the U.S.
Alaska governor weighs in
Alaska Gov. Bill Walker, an independent running for re-election, is trying to leverage the trade war to further his long-held dream of construction of an Alaska gas line. He Monday signalled he is heading for the nation’s capital to try to mediate a truce.
“Next week, I will meet in Washington with leaders from both governments who have been at the table leading the efforts to avoid an unnecessary trade war,” he said in a statement issued Monday by his office. “I will continue to work directly with both sides to make sure Alaska’s interests are protected.”
“Alaska has abundant resources, from natural gas and seafood to beer and baby food,” his statement said. “These resources enable our state to dramatically reduce the trade deficit between the United States and China, if we can finalize agreements to increase exports of our products.”
The U.S. trade deficit with China rose to a record $375.2 billion last year, according to the U.S. Department of Commerce. Craft brewing is a booming business in Alaska, but it’s unlikely to help balance trade with China.
The state’s 35 breweries produce less than 1 million gallons of beer per year, according to the Alaska Department of Labor. Bud Light sells a reported 1.24 billion gallons per year and companion brand Budweiser another 1.23 billion gallons.
If Alaska sold all of its beer and seafood to China, and the Chinese stopped adding value to the latter and shipping it back to earn profits that increase the trade deficit, Alaska products now in production would barely put a dent in the balance of payments between the U.S. and China.
A natural gas pipeline and liquified natural gas (LNG) shipments to China could move the needle, but the Trump administration’s big complaint about China is that it has for decades now been getting the better of the U.S. in business deals.
An Alaska-China deal on gas that benefits Alaska and China at the cost of the U.S. balance of trade – as the current seafood deals do – might not sit well with the Trump administration.