Trade war, COVID cast long shadow on U.S. fisheries

Dungeness crabs
Dungeness crabs fished from the waters of the Pacific Northwest (Menghan Xiao/Medill)

By Menghan Xiao
Medill Reports

Since 2005, when Jim Darmiento quit his job at a global company to start a crab fishing business, he has experienced countless hardships. While he said his strong belief of “no risk and no reward” has allowed him to overcome all challenges, from expensive early-stage investment in gear to unpredictable weather, the tribal fisherman who is part of the Quinault Nation fleet never expected his business would be hit hard in recent years by two global events over which he had no control – the U.S.-China trade war and the COVID-19 pandemic. 

Jim
Jim Darmiento has been a tribal fisherman for 17 years as a part of the Quinault Nation fleet. (Menghan Xiao/Medill)

“Chinese people love our crabs,” Darmiento said. “(Chinese buyers) used to take whatever we have, especially during Lunar New Year.” Based in Westport, Washington, Darmiento would typically sell 200,000 pounds of Dungeness crabs to the Chinese market each year. With swift air delivery, Dungeness, a sweet and tender crab fished from the waters of the Pacific Northwest, could be served on a dinner table in Beijing in two days. 

However, the disruption of the supply chain under the trade war and the COVID-19 pandemic has caused an excess of crabs to flood the market.

China’s demand for seafood has steadily grown in the past 20 years due to increasing purchasing power among the middle class. Despite China’s seafood imports having surged in 2018 and 2019 by over 40% and 30%, respectively, American fishermen did not enjoy a penny from the boom due to the U.S.-China trade relationship. As Beijing responded to President Donald Trump’s trade war with 25% retaliatory tariffs, U.S. seafood exports to China in 2019 dropped 26% compared with exports in 2017.

“Trump started the trade war, but he hasn’t paid for it at all,” Darmiento said. “It is me and all the other workers in this industry who have to pay for the cost.” According to Darmiento, the crab fishing business experienced “terrible pricing” throughout the entire 2019-20 season due to additional tariffs. “It is ridiculous that one day you woke up and heard them (Chinese buyers) canceling all the orders,” Darmiento said. 

Although China began reducing and removing additional tariffs on U.S. products after the phase one trade deal was signed in 2020, and the U.S.Department of Agriculture (USDA) offered the seafood industry a $530 million relief fund to support fishermen, Darmiento said these cannot offset his losses. 

Canadian seafood exporters have become the biggest beneficiary of the U.S.-China trade war. During 2018 and 2019, in contrast to a slump in U.S. seafood exports to China, Canada’s seafood sales to China spiked, reaching record highs. The surge in China’s export was mainly driven by lobster as Chinese seafood companies shunned the U.S. market and switched to Canadian wholesalers. In 2019, lobster exports to China reached $509 million, increasing 70% compared with the previous year, according to Fisheries and Oceans Canada. 

As a result, many U.S. fishermen are sending their seafood to Canada, which in turn exports them to China, bypassing retaliatory tariffs. 

Darmiento found his own alternative export route to Canada at the end of 2020. Although the new route adds 15% to his transportation cost, Darmiento said he believes it is worthwhile. “I know I should have minimized my cost now, but this is the only way for me to keep China’s market, ” he said. 

Figuring out solutions to keep the Chinese market and regain profit after the trade war would have been enough of a challenge. However, no one expected the industry would be double hit by a global health crisis. 

fishing boat
Fishing boats come from all over the west coast to Westport WA. Fishermen here place millions of pounds of seafood into local, domestic and global markets every year. (Menghan Xiao/Medill)

The first COVID-19 case appeared long before the pandemic spread across the U.S., as China declared a lockdown and the seafood export market that had just begun to recover from the trade war disappeared overnight. From February to April 2020, U.S. seafood exports sharply dropped from 29% to 43% below the previous year’s value.

As COVID-19 took hold on the U.S. shore in March 2020, the domestic supply chain was disrupted when restaurants began shutting down and fishers began social distancing. According to Darmiento, the crab season opened at $2.50 per pound in December 2020, which is the lowest starting price he has ever seen. 

Oyster sales were affected even more due to their strong reliance on the domestic market. Tony Forsman, general manager of a tribal chartered company called Suquamish Seafood Enterprises, said their oyster sales vanished overnight, from 10,000 dozen a week to zero, once the COVID-19 restrictions hit. 

“We’ve already lost millions of dollars on geoduck due to the trade war,” Forsman said. “The domestic oyster sales meant to make that up, but the pandemic just makes everything worse.” 

While the pandemic has exposed the vulnerability of the U.S seafood market, it has also transformed the industry in a way that has built resilience for future shocks. As consumers shifted their consumption behavior from restaurants to home delivery and local purchasing in response to social distancing policy, direct-to-consumer sales have become an essential business model for seafood companies. Learning from the pandemic, Forsman and his Suquamish Seafood Enterprises are prepared to expand their retail operations to online sales. Rather than rushing into this new business model, Forsman decided to prepare it step by step, from buying a new point of sale system to improving packaging. “I’m old school, so it is a hard adjustment for me,” Forsman said. “But pandemic and trade war have taught me to value resilience over profitability and efficiency.” 

Resilient fisheries require not only new business models but also a more sustainable marine ecosystem. 

Forsman’s shellfish farm and many others were hit hard by the extreme heat wave that swept across the Pacific Northwest last summer. “I’ve talked to other fish farmers, and I knew many of them lost up to 80% of their oysters on the beach,” Forsman said. Since a typical oyster production cycle takes two to three years, this devastation of oysters has made fish farmers’ efforts all in vain. It also has a long-term impact on the ecosystem as oysters can clean up the water and provide habitat for other species by forming reefs. 

According to the Intergovernmental Panel on Climate Change (IPCC)’s recent report, ocean acidification and climate crisis are affecting the ecosystem at an unprecedented rate, limiting the ability of aquaculture to satisfy the future seafood demand of a growing human population. 

“We are facing more extreme weather events in recent years, and climate change plays a big role in that,” said Joe Schumacker, a marine scientist at Quinault Department of Fisheries.

Forsman said he understands environmental issues cannot be solved in the short term, but he hopes scientists can work with the local fishery to minimize the impacts. Meanwhile, Forsman said his business has started to come back this year, “slow but sure.” As for Darmiento, Shanghai’s recent lockdown once again dealt a blow to his crab exports. “It’s an uphill battle,” he said, “and we have no choice but to move on.”

Menghan Xiao is a Video and Broadcast graduate student at Medill. You can follow her on Twitter @Menghan_Xiao_

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