Chinese Tilapia Market and impact of US tariffs on its Cost 01-19-2020

Tilapia is the world’s second most farmed fish in the world, mainly because of its resistance to diseases. China is the world’s largest producer of the world and its market has been forecasted to reach 1.8 million tons in 2019, an increase of around 500,000tones compared to last year. In 2018, farmers ramped up production in the second half of the year and at the start of 2019 in order to ship the volume before the expected effective date of the tariff hike in December and then in March.

However, the mounting difficulties associated with the introduction of the US tariff has allowed some of the Chinese tilapia producer and processor to shift their focus towards other species such as shrimps and pangasius, which have affected the production forecast of tilapia in downward direction. Though the restriction now imposed by the US on Chinese tilapia industry is on profit margins, but this will be translated into low standards and practices that have driven improvements in environmental and social responsibility.

The recent US tariffs have added difficulties for the Chinese tilapia marketers as now additional 15percent tariff has to be paid by Chinese tilapia exports to the United States which outweigh the profit margin in the supply chain, meaning that the cost must or will be passed down the supply chain to the consumers. Furthermore, negative perceptions about the Chinese-origin tilapia and stiff competition in the commodity whitefish segment are pressing challenges for the Chinese exporters.  In response to these challenges the Chinese tilapia producers and marketers are aiming to improve the appeal of tilapia from a Chinese perspective have been launched and investments have been done to increase its sales in European countries.

China tilapia industry is now aiming for other diverse array of countries to expand its tilapia exports as according to industry experts the demand growth in Africa is outstripping the supply, despite their increasing domestic production. The current scenario and tariffs have negatively impacted the Chinese tilapia industry in terms of prices and export levels, but exporters and producers of tilapia are hoping for the situation to change with phase one trade negotiations between the US and China.  Furthermore, the consumers in developing countries and producing region are also expected to increase the demand for Chinese tilapia in the market. Prices of Chinese tilapia are going down but they are expected to settle down once the Chinese market gains tariff-free access to the US and other markets.

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