Salmon Trumped

China might have decided against imposing tariffs on Alaska salmon off which Chinese businesses make an estimated $1.5 billion, but the Trump administration has taken a different view.

As part of President Donald Trump’s plan to “Make America Great Again,” the government is imposing on a 10 percent tariff on Alaska seafood processed in China only to be shipped back to the U.S.

Alaska sells an estimated $1.3 billion in seafood to China. Much of it is processed there and then shipped back to American consumers who spend $2.7 billion on the imports, according to the National Oceanic and Atmospheric Administration (NOAA). 

Much of that seafood is salmon headed and gutted in the 49th state later to be fileted and deboned in China where labor is cheap. Sometimes because it is North Korean slave labor, according to a 2017 Associated Press investigation.

Salmon processors, which once had salmon canneries ringing the Alaska coast, have over the years been steadily moving processing operations offshore. As a result, Bristol Bay, the heart of Alaska’s valuable red salmon fishery, has been bleeding population for years.

Brad Angasan, now a resident of Alaska’s largest city, in 2016 recounted for Saveur magazine how his home village of South Naknek  had shrunk from 150 people to fewer than 70.

“He blames that steep decline on the loss of the village’s packing plants,” wrote Alex Testere. “Many years ago, South Naknek housed two processing plants and two fish camps, which housed seasonal workers and fishermen. Now, ‘off those four, none of them process anymore—Trident Seafoods was the last, back in the ‘90s,’ says Angasan.

“Last fall, the last fish camp shut down too. The same thing has happened to the Native villages up and down the peninsula, so that hardly any local jobs remain. With nothing else near enough to commute to, more and more families are moving to big cities like Anchorage. ‘It’s potentially a death knell for our community,’ Angasan says. Once too few families with children remain to justify keeping the local school open, the rest move away too, and the village dissolves along with the Native community it contained and many of the traditions that community upheld.”

Salmon processing in Alaska by large corporations echoes the issue of outsourcing jobs to other countries about which Trump loves to rant. He last year promised to “reward firms that maintain jobs in the United States, and deliver punitive measures against those that move operations offshore,” Reuters reported.

“‘It’s both a carrot and a stick,’ Trump said. ‘It is an incentive to stay. But it is perhaps even more so – if you leave, it’s going to be very tough for you to think that you’re going to be able to sell your product back into our country.'”

Alaska gets the stick

Forty-ninth state products processed in China pop-up specifically on the new Trump tariff list released this week – most notably in the form of sockeye salmon, almost all of which come from Alaska.

The U.S. tariff order blames all of this on China for responding “to the initial action by imposing increased duties on goods of the United States. In light of China’s decision to respond to the (unfair trade) investigation by imposing duties on U.S. goods, the Trade Representative proposes a modification of the action taken in this investigation.

‘The proposed modification is to maintain the original $34 billion action and the proposed $16 billion action, and to take further action in the form of an additional 10 percent ad valorem duty on products of China with an annual trade value of approximately $200 billion.”

The document goes on to list dozens upon dozens of products from China that will be hit with the new tariff. Among them:

• “Sockeye salmon (red salmon) (Orncorhynchus nerka), frozen, excluding fillets, other meat portions, livers and roes;
• “Pacific salmon, other than sockeye, frozen, excluding fillets, other meat portions, livers and roes;
• “Herring, salmon, Alaskan pollock, mullet, other fist liver and roes, frozen;
• “Salmon fillets, fresh or chilled;
• “Frozen salmon fillets, skinned, in blocks weighing over 4.5 kg (kilograms), to be minced, ground or cut into pieces of uniform weight;
• “Other frozen salmon fillets;
• “Salmon, in brine or salted but not dried or smoked;
• “Prepared or preserved salmon, whole or in pieces, but not minced, other than in oil and in airtight containers.”

Suffice to say, pretty much everything salmon coming back to the U.S. from China is covered by a tariff. Halibut, other flatfish, pollock and cod are also on the list, but the big issue for Alaska is salmon.

“Salmon harvesting employment…represents the majority of Alaska’s commercial fishing jobs,” according to the Alaska Department of Labor. Salmon jobs, in fact, top the combined number of jobs for crab, halibut, other groundfish, sablefish, shellfish and herring fishing in the state.

What exactly the salmon tariffs will mean for the commercial fishing industry this year, however, is unclear. Maybe nothing. The new tariffs aren’t scheduled to start until September, by which time the Alaska fishing season is winding down,. And there is a possibility the tariffs could be dropped before they are imposed.

Hearings are scheduled to be held, and the seafood industry is actively lobbying. Seafood News lamented in an editorial that “China for many years has been the fastest growing global market for high-end seafood.  All seafood companies selling into China have been investing millions of dollars to build their brands and country of origin recognition.

“ASMI (the Alaska Seafood Marketing Institute) has made China one of its more significant targets for export growth.  Alaska Gov. Bill Walker led an export mission last month to China that featured a number of Alaskan seafood companies.   All this money will go up in smoke.  ASMI says it will turn to other markets.  But it is more expensive to mount campaigns in four or five different countries than in a single large market like China.  The impact of the seafood industry dollars spent on ASMI will decrease.

“Even worse, if ordinary Chinese see the U.S. as attempting to bully their country, they may turn against American goods.  China has a very nationalistic streak, and at times this has led to riots against Japanese seafood companies in China, when tensions between those two countries were high.  The US risks getting drawn into a similar relationship, where Chinese consumers actively seek to buy anything but American products.

“Finally, much of the growth in high-end seafood consumption in China has been driven by the exponentially growing e-commerce networks, the rapid build out of the cold chain, and the pioneering hour to your door delivery systems.”

Despite all the talk about developing markets, Seafood editor John Sackton conceded at the end of his editorial that the big issue for Alaska is with reprocessing.

“There is a particular problem with US exports for reprocessing from Alaska,” he wrote.  “The fact is that over time a supply chain has developed where a substantial amount of pollock, cod, and salmon is caught in Alaska, sent to China for processing, and re-imported into the US as twice frozen blocks, frozen fillets and value added products. Many of these products are produced with very narrow margins, so there is little room to absorb the higher tariff cost.

“This puts prices to Alaska fishermen at risk for such things as pink salmon and pollock.”

He conceded some small, domestic producers might benefit, but “the few instances where a domestic producer may benefit are hugely offset by the far larger groups that will see their businesses hurt.  That is why everyone is so upset.”

Some of the country’s top economists continue to warn that Trump has started a trade war to save U.S. jobs that is destined to lead to major U.S. job losses, but there is some debate about that.