The Tariff war: main facts and consequences

The Tariff war: main facts and consequences

The battlefield began to settle a few months ago, when the US government threatened to impose a 10% tax on importations from China. Irremediably, these fees would eventually reach the products of the aquaculture industry and tilapia, like many other seafood, would be one of the goods affected by these new impositions. As early precautionary measures to face possible future circumstances, processing plants in China began to produce larger quantities of tilapia, and purchases from American importers increased markedly to get stocked up on large quantities and store, preparing for what could happen. In May, the threat was finally met and the new taxes on Chinese imports that, were no longer of 10% but of 25%, became effective; this was how the first battle of this commercial war between the two powers begun.

Undoubtedly, the new world scenario has been modified and following up next, we will mention the main milestones:

  • The aquaculture industry in China is immersed in great uncertainty, and waiting to see what happens in the coming weeks. In the meantime, Tilapia farms are still operating, but the volume of purchase has declined so significantly that prices have been affected by a considerable reduction. However, this situation could not be prolonged for a long time, otherwise, there would come a time when production costs would exceed the profits of the producers themselves.
  • Many producers in China are dependent on the American market, and this war pushed them to search for alternatives, so they are trying to open up to new markets where they can obtain purchase orders, and in this way, keep their employees working actively. Meanwhile, the producers that are already operating in other markets, have also been affected by the situation, since the price of Tilapia is falling, and although, they maintain their sales, they must adapt to the new conditions imposed by this scenario.
  • The large volumes of Tilapia purchase by American importers would begin again in August of this year. So, we will have to wait a few more weeks to see the market´s behavior, since prices will depend directly on the demand and the needs of the processing plants in China.
  • On the other hand, importers of tilapia are requesting that the price increase caused by the new taxes should be distributed. In some cases, the plants themselves have lowered prices to share the load with their buyers; Likewise, distributors and supermarkets are also being asked to increase prices accordingly, with the goal of not affecting the sales chain so much.
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