In Cold Alaska Seas, Front Line Emerges in U.S.-China Trade War

(Bloomberg) -- With the U.S. and China squaring off in a global trade war, Alaskan fishermen have plenty of reason to worry.

That’s because Beijing has pledged to start imposing steep tariffs on $34 billion worth of American imports next month, including a wide assortment of fish and shellfish. The Chinese list of items specifies certain seafood products as subject to tariffs, though it’s not completely clear which species and products it will target. Still, the threat is enough to create concern that Alaskan exports such as sablefish will take a hit.

China is the top foreign market for Alaska and its fishing industry, buying nearly $1 billion worth of the state’s $3.45 billion in seafood exports last year, according to estimates from Alaskan research and consulting company McDowell Group. The industry directly employs an estimated 26,500 residents in the state, according to a 2017 report from McDowell. That’s significant considering the state’s civilian labor force was 362,500 in May.

In Cold Alaska Seas, Front Line Emerges in U.S.-China Trade War

The threat to Alaska epitomizes how President Donald Trump’s pledge to crack down on Chinese trade practices could cause job losses and economic pain in numerous states -- particularly those that supported his presidency. Alaska voted for Trump in 2016, while its two senators and single congressional representative all hail from his Republican party.

Expressing Concerns

Those lawmakers have moved swiftly to address the tariffs on social media, expressing concerns in tweets and Facebook posts. They tried to get the White House to avert a trade dispute in a letter they sent to Trump in May, when Cabinet members were still negotiating trade differences with counterparts in Beijing.

Since those talks fell apart with no agreement, Trump has doubled down on pledges to punish China for its trade surplus with America and alleged violation of U.S. intellectual property rights. He has threatened to slap tariffs on hundreds of billions of dollars in Chinese goods if Beijing doesn’t back down and stop threatening to retaliate.

Here’s the latest timeline on trade tensions.

White House officials say any short-term economic pain will be offset in the long run by a more level playing field in international trade. Commerce Secretary Wilbur Ross last week said in Senate testimony the government would provide assistance to people hurt by tariffs, without explaining how.

‘Lose Ground’

Even if they do receive some form of government help, Alaskan fishermen fear trade tensions will reverse the gains they’ve made after decades of marketing their products in China.

“Any time something like this happens, you lose ground,” said Alexa Tonkovich, executive director of the Alaska Seafood Marketing Institute, a partnership between the industry and the state. “It’s been a slow process to gain the good ground that we have in China.”

One example of that progress is the sale of sablefish, a catch known as black cod that Seafood Producers Cooperative Chief Executive Officer Joe Morelli says is even tastier than lobster tail. The group expects to increase sales of the fish to China as much as fivefold this year to $5 million, which would account for about 40 percent of its supply, Morelli said.

Chinese Barriers

But Chinese barriers to American goods could limit those ambitions. Morelli said he expects tariffs will hurt prices for sablefish.

“Disruption in the short run could be very serious, and people are going to be scrambling to figure out ways to move this fish to avoid the impacts of the tariffs,” said Ralph Townsend, director of the Institute of Social and Economic Research at the University of Alaska Anchorage.

The tariffs could even end up hurting Chinese businesses, considering at least half of Alaskan seafood sales to the country are processed there for re-export. This includes things such as cleaning and filleting the fish, readying them for dinner tables around the world.

Tonkovich of the Alaska Seafood Marketing Institute says she’s “cautiously optimistic” that fish going to China for reprocessing will be exempt from the duties.

“That will make a big difference,” she said. “For the industry at large, still being able to reprocess in China would be significant.”

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