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3-Minute Market Insight

EP 528 | AIRED 03/08/2021

Seafood Tariffs Update - Time to Go, or Here to Stay?

March 8, 2021 --- This week we examine tariffs imposed on Chinese processed seafood and how the climate may or may not change under the new Administration.

--- Enough time has passed now that tariffs on Chinese processed seafood items seem like a "normal" cost component when discussing US imports.

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The "Section 301" tariffs, as they have come to be known as, were first implemented in September 2018, 30 months ago.

Implemented by the Trump Administration, the hundreds of billions of dollars in tariffs were intended to level the playing field with China and encourage domestic production.

Unfortunately, the 10 percent tariff on seafood items eventually became 25 percent, and it was not importers or distributors who suffered losses, the duties essentially acted as a tax on Americian consumers.

Instead of bringing production back to the USA, the tariffs pushed some Chinese manufacturing to third world countries for export.

Approved tariff exclusions helped temporarily curb the additional costs, but as of December 31 2020, the only items with exclusions were medical products related to COVID-19.

US IMPORTS FROM CHINA

--- In January 2020, former President Trump signed the Phase One Deal which included negotiating the removal of tariffs in favour of resolving several issues trade issues.

In the seafood world, these issues relate to CIQ speeding up seafood facility registration time frames, adding more approved species for export to China, and convert from routine aquatic product facility inspections to risk-based audits.

The former President agreed that he would take those tariffs off if they were able to proceed to a Phase Two agreement, indicating the tariffs were under negotiation.

We know now, in March 2021, that those negotiations were not completed and Phase Two did not begin.

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--- The new Administration has tough decisions to make now - remove the tariff and weaken the image of a strong trade partner, or continue the tariffs that many economists have indicated directly burden Americans' household income.

President Biden's pick for US Trade Representative, Katherine Tai, was approved by the Senate Finance panel last week and heads to a vote by the full Senate to become the top US trade negotiator.

Ms. Tai indicated earlier this year that companies who are keen to keep the Phase One trade deal should be prepared to continue living with seafood tariffs too.

When calling the US Trade Representative's office for a statement, we were advised that they cannot comment on any tariff extensions or exclusion renewals under the new Administration.

For now, seafood buyers can continue to see strong pricing on Flounder, Sole, Haddock, and other seafood items with expired tariff exclusions.

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