New U.S. taxes on products from China could mean bad news for the caviar industry here in America. Current proposed legislation focused on reducing trade deficits includes a 10% additional tariffs on select Chinese seafood products. Although farmed sturgeon roe is not technically a "seafood," all Chinese caviar has been included under the Trump administration's newly imposed taxes. Imported caviar from China is already taxed at 15%, but as early as September 11th, 2018 that rate could be up to 25%. In recent years, a growing majority of popular sturgeon roes sold in the United States has been sourced from China. With rising import taxes looking like a reality, that may soon change.
The United States' seafood deficit with China stands at about $1.5 billion. The US exported $1.2 billion in seafood products where we imported $2.7 billion in seafood products from China last year alone. Out of that $2.7 billion, about $700 million was solely caviar imported from China. While some claim that the seafood trade deficit between the U.S. and China is caused only by Chinese taxes on U.S. products, others see the U.S. fishing and aqua-farming industries facing many more issues than just trade policy.
Of the estimated $11 billion total seafood trade deficit the U.S. accrues annually, the difference in trade numbers between America and China compared to other trade partners is not the largest of margins. The seafood trade deficit with Canada, a close-by neighbor with lower taxes on U.S. products, currently sits at $2.3 billion a year. How is it that the U.S.A., with so much coastline and so many lakes and rivers is suffering in the global seafood market? In addition to certain areas of the country experiencing poor fishing seasons, advances in aqua-farming seems to be another cause of America falling behind in international seafood trade.
Other countries are now able to farm fish more effectively and often offer cheaper seafood than the United Sates. This includes the lower priced, quality sturgeon caviar. The lowered price of imported caviar has recently caused the quality of many US farmed sturgeon roes to decline as costs are cut to stay competitive in the marketplace. This dive in quality has led to many companies importing their Osetra, Siberian, and even American natives such as the White Sturgeon, rather than buying domestically. With new taxes on the horizon, these importers face a dilemma with no easy solution.
Despite the new tariffs, many companies will keep buying caviar imported from China and pay the 10% increase. After a slight squeeze of their profit margins, most caviar sellers will still find sturgeon roe farmed in China still has lower costs and more consistent quality than sturgeon roe farmed in the U.S.
Others expect that with new tariffs on Chinese seafood products, companies will start relying more on imports from Europe. As importers move to buy caviar from European exporters, producers and farms like Giaveri in Italy, more uncertainty looms on the horizon. If relations with the E.U. worsen, then tariff increases similar to those placed on China could could be enacted upon European seafood in what some would call a trade war.
Caviar Star, as a U.S. based importer / exporter of fine specialties from around the world, has always tried to sell high-quality sturgeon roes farmed within our country before importing. However, as U.S. producers now have to offer lower quality farmed sturgeon roe or sell their product way above the market value, most sturgeon roe farmed in America is not attractive to domestic or international markets. We hope that American farmed caviar can make a comeback soon, because with expensive tariffs placed on China and trade relations with E.U. allies worsening, where else can we get high quality "true" caviar from the world's most popular sturgeons?