Trump’s tariffs on Chinese caviar may stop a quiet takeover of the world’s gourmet kitchens

Imported caviar from China could soon cost Americans more if the US puts new tariffs on industries where mainland Chinese businesses, with the help of the government, have excelled

PUBLISHED : Friday, 03 August, 2018, 12:01am
UPDATED : Friday, 03 August, 2018, 6:07pm

In the scorching July sun about a two-hour train ride west of Shanghai, Li Shilei tended to his precious charges.

On a massive man-made lake in Zhejiang province, 30kg sturgeon constantly leapt out of the water as workers removed plastics and other garbage from otherwise pristine waters of one of the world’s largest aquatic farms.

Li manages 40,000 square metres of fishing ponds at Qiandaohu, or the Lake of a Thousand Islands, the hub of a Chinese industry that is quickly and stealthily dominating the world’s gourmet kitchens: caviar.

As a result, the prized delicacy is now a victim of the escalating trade war between China and the United States.

US President Donald Trump’s administration is considering a proposal to more than double the import tariffs on US$200 billion of Chinese products from antiquities to shoe polish to 25 per cent. That goes on top of the US$50 billion of products designated for 25 per cent tariffs earlier this year.

The levy would add to an existing customs duty of 15 per cent on all Chinese caviar imported into the US.

This will definitely affect the amount [of caviar] we can export to the US. We are strongly against this policy
Han Lei, Xunlong Sci-tech

Caviar may seem an odd target for the Trump administration. Imports of Chinese-made pet food, which also face new tariffs, were worth 20 times more last year. The proposed levies on caviar, however, mark the latest US move to go after an industry that has become dominated by China in recent years – partly because of government help.

And that has Chinese producers worried.

“Even a 10 per cent addition to the price will increase the cost to the American caviar consumer,” said Han Lei, vice-president at the Chinese company behind the caviar brand Kaluga Queen, where Li the farm manager works.

The company sold 3 tonnes of caviar in China and exported 68 tonnes last year, 29 per cent of which went to the US, its second-largest market after Europe, Han said.

For many, caviar has long been associated with beluga sturgeon from the Caspian and Black Seas. Export restrictions after years of overfishing, US sanctions on Iranian exports and huge Chinese investment in sturgeon farms have helped China leapfrog traditional producers.

Chinese caviar is now served everywhere from the first-class cabins of German airline Lufthansa to high-end French restaurants in Hong Kong.

This year alone, China shipped more caviar to the US than the rest of the world combined, according to the latest government data.

The fall of the Soviet Union led to a spate of sturgeon overfishing in the Caspian and Black Seas in the 1990s, prompting the United Nations to regulate the trade of sturgeon worldwide in 1998.

Commercial fishing of wild caviar-producing sturgeon in the region has since been banned, and beluga caviar now only comes from farmed fish. The US banned imports of beluga caviar in 2005, as the fish it comes from is considered threatened under the US Endangered Species Act.

Outside the US, sales of beluga caviar are limited by strict quotas enacted by Caspian-region countries. Iran’s caviar industry has also been hurt by years of US sanctions.

The US lifted a ban on importing Persian caviar, other than beluga, and carpets in 2016 after reaching a deal to end Iran’s development of nuclear weapons.

But Trump walked away from the nuclear deal this year and import bans on Iranian foods are expected to return next week, according to the US Department of the Treasury.

Against this backdrop, China quietly built a huge industry to sustainably farm sturgeon and become the largest caviar exporter to the US.

Five years ago, China accounted for only 10 per cent of US imports. By 2017, up to 45 per cent of all caviar shipped to the US, or about US$7.2 million worth, originated in China.

Mark Zaslavsky, an owner of Marky’s Group, a Miami-based importer of caviar and other gourmet foods, said the additional tariffs were likely to cut into purchases of Chinese caviar and drive consumers to cheaper roes produced in the US or other countries.

“An increasing tariff duty on incoming products may help aquaculture in the US,” said Zaslavsky, adding that Chinese products now make up less than 10 per cent of his business.

Caviar comes from the unfertilised roe, or masses of fish eggs, collected from mature females of several sturgeon species, including the beluga and the kaluga, which is native to the Amur River basin along the China-Russia border.

The massive fish – beluga can grow up to 5 metres (16 feet) – can live for as long as 100 years, but overfishing has depleted the population of many caviar-producing species in the wild because they do not reproduce every year, according to the International Union for Conservation of Nature.

After it is collected, the roe is salted and cured to become caviar.

The improving quality of Chinese caviar has helped it gain a following among some of the world’s leading gourmet cooks, including the French chef Alain Ducasse.

The price of the Chinese product – up to 35 per cent cheaper than imported caviar – and its availability and consistency have encouraged Le Pan’s executive chef, Edward Voon, to experiment with it in different dishes, including beef tartare and sauces.

“Chinese caviar offers me the diversity of choice for me to use in every aspect of cooking,” Voon said in Kowloon Bay, Hong Kong. “If the caviar comes from France, the price is a bit higher and I will be very careful with it. With the Chinese caviar, you can do different dishes with it.”

“It gives people that ‘wow!’ feeling,” Voon said. “Caviar gives you a different type of saltiness to everything. People would usually just add seasoning, but I think caviar can offer you a different kind of dimension of seasoning.”

On a recent shopping trip in Hong Kong, Chinese kaluga caviar could be found for HK$1,730 (US$220) for 30 grammes (1 ounce), 40 per cent of the price of Iranian beluga caviar at HK$4,180 for the same quantity.

Quzhou Xunlong Aquatic Products Sci-tech Development Company, the producer behind Kaluga Queen, started in 2003 with help from the Chinese Academy of Fishery Sciences, which had begun a programme five years earlier to develop sturgeon farming in China. The government institution still maintains a small investment in the company.

In just over a decade, the company went from its first tin to becoming one of the largest producers in the world. Its caviar was served at the G20 leaders’ summit in Hangzhou in 2016. The company, which employs more than 300 people, is now an exclusive supplier to Lufthansa, which serves Kaluga Queen in its first-class cabins.

Kaluga Queen harvests roe from six sturgeon types, including native kalugas and Caspian species at its Qiandao Lake and Quzhou farms. For Li, that means keeping to a precise schedule and enforcing stringent standards on his team of farmers.

“We have a strict timetable to follow,” Li told the South China Morning Post during a recent visit. “We are required to feed the fish only in the morning, but barred from doing so in the afternoon.”

The ultimate impact of Trump’s tariffs on Chinese goods is yet to be determined, as the proposed list is subject to public comment until the end of August, while some items could be removed.

But the spectre of higher tariffs leading to an export slump to the US has Chinese producers concerned.

“A 10 per cent tariff will certainly add to the cost of distributors and buyers,” Han said during an interview in Beijing. “It may also affect the speed of our market expansion. Some of our distributors said they can handle a 10 per cent tariff. Caviar is a luxury product, so consumers are more concerned with quality, and the price is usually a secondary consideration.”

Additional reporting by Amanda Lee in Beijing