The introduction of an additional 10% -- or potentially even 25% -- tariff on seafood imports from China, threatened by US president Donald Trump, would kill the trade between the two countries on tuna, industry sources in Asia and the US told Undercurrent News.
However, additional tariffs are unlikely to cause an increase in prices in the North American market, as others will step in to fill the gap, sources said.
Similarly, China will be able to shift its volumes to other markets, an executive with Zhejiang Ocean Family Co., one of the country's largest seafood companies and a big player in tuna, toldUndercurrent.
“The US government tariffs, once implemented, will destroy the balance of the business relationship and market,” said Fang Zuyue, a senior executive with Zhejiang Ocean.
China has been selling tuna to the US for many years and “has established a relatively stable supply and purchase relationship”, which will be eradicated by the tariffs, said Fang.
“However, tuna is not a single market in the United States, and there are mature consumer markets all over the world. In addition to the countermeasures of the Chinese government, Chinese suppliers will definitely seek buyers from other markets and seek cooperation. The same is true for American buyers,” Fang noted.
Zhejiang Ocean is well positioned to have an overview of the impact of the tariffs, as one of China's largest tuna, and seafood, players.
The company -- which had a turnover of CNY 2.97 billion ($435 million) in 2017 -- owns 18 large-scale super-frozen tuna longline tuna fishing vessels and four large-scale tuna purse seining vessels, as well as nine large-scale squid fishing vessels. The company also has a super-frozen tuna processing and logistic base and a canned tuna plant, both in Ningbo. The annual production capacity of these two bases of tuna raw materials reaches around 100,000 metric tons, according to the company's website.
Other Asian sources agreed Trump's increase in tariffs would be detrimental for Chinese growing tuna exports to the US, but that firms in the country would quickly diversify their destination markets.
"The main product we export to the US is canned tuna. Currently, [the] supply of these products is pretty tight, so we'll be okay not selling to the US. We sell relatively few other tuna products [to the US]," Huang Baoshan, vice-president of China Overseas Fisheries Association, told Undercurrent.
One source, who asked not to be named, told Undercurrent the tariffs would change the way people source tuna in the US.
For any company conducting a "private label program" in China for the US, the introduction of a 10% additional tariff would destroy the margin, he said.
In any case, the introduction of new tariffs is not expected to cause a spike in US tuna prices, according to sources.
“Fish will find its way to other processing areas, so not real long-term impact," a US-based industry source told Undercurrent. “Tuna is migratory and so is the processing base.”