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New tariffs could hurt Tilapia’s popularity

Tilapia’s rise to ubiquity across U.S. restaurants and seafood aisles over the past decade has been rapid. Now that the Trump administration has targeted Chinese seafood with a 10 percent tariff, its golden age may be coming to an end.

The fish, popular for its mild taste and low cost, is among the estimated $200 billion of items that could rise in price for U.S. consumers as President Donald Trump aims to erase the nation’s longstanding trade deficit.

Now, importers and distributors are on high alert to see whether tilapia emerges unscathed from a late-August public comment period on the proposed tariffs.

If not, the product could become an example of how even minor cost increases can reverberate across supply chains and economies as the hospitals, nursing homes and schools that buy frozen Chinese tilapia are forced to look elsewhere for cheap protein — or pay more.

Tilapia’s Dominance

China’s top fish export to the U.S. is popular for its mild taste and low cost

“We can’t absorb the cost of tariffs if we have to pay more for tilapia,” said Dan Fusco, President of Global Food Trading Corp., an importer and distributor of frozen fish to wholesale distributors. “We will raise the prices.”

The U.S. receives more than 80 percent of its frozen tilapia fillets from China, and 2018 imports through May from the country totaled about $82.4 million, according to data from Urner Barry, a research firm for the food industry. While the U.S. gets most of its fresh tilapia from Latin America, the frozen variety has gained traction because of its lower cost. And with the U.S. lacking tilapia processing plants, companies don’t have an easy replacement if Chinese supply gets costlier.

Cost Burden

Kevin Fitzsimmons, a professor and researcher at the University of Arizona as well as a director of Americas Tilapia Alliance, says that U.S. consumers will suffer more than Chinese producers, since they have made inroads in other markets such as Europe, Russia and the Middle East.

He adds that consumers may not have any other good options for cheap fish: The cost of basa — a Vietnamese catfish and the closest substitute to tilapia — rose recently in the U.S. due to to separate anti-dumping duties.

The U.S. imported nearly 134 million kilograms (about 148,000 tons) of frozen or fresh tilapia from China last year, data from the National Marine Fisheries Service show. While that’s down from 173 million kilograms in 2014, it still represents the largest Chinese seafood export to the U.S.

The Fishin’ Co., a tilapia importer, says it’s disappointed in the tariffs and that shoppers will bear the brunt of higher costs. And it’s not just tilapia: Some wild-caught species such as salmon and cod are sent to China for processing, even if they are fished elsewhere. Consumers may also see these products get more expensive.

“Some of the cost may be absorbed into the value chain,” the Munhall, Pennsylvania-based company said in an email, “but any time you introduce cost into that chain, it tends to find its way to the end consumer.”

 

Source: Bloomberg

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