US Tariffs May Fundamentally Impact Shrimp Trade Landscape

Disclaimer: This table is produced on a best-effort basis, but errors may occur. 

Although it’s too early to speculate, it’s clear that Trump’s new trade policy will have significant short-term and most likely fundamental mid and long-term implications for shrimp trade flows. 

Here are just a few first thoughts to consider.

First, about the impact of tariffs on the competitive landscape within the US shrimp market:  

• It’s unclear how tariff negotiations will unfold. One central question is whether negotiations will reduce universal tariffs or result in a shift from universal to commodity-based tariffs.
• If tariffs remain unchanged, Ecuador and several smaller producers such as Argentina, Honduras, Mexico, Guatemala, Peru, and Saudi Arabia have a competitive advantage over most Asian countries. They may take advantage of the situation and gain market share.
• India is relatively advantageous in Asia compared to other major suppliers such as Indonesia, Thailand, and Vietnam. It may aim to take market share in product segments that Latin American producers are not ready to supply. Indonesia, Vietnam, and Thailand will face difficult times regarding their US business.
• Smaller Asian suppliers such as Bangladesh and Sri Lanka are even more severely affected and will likely have difficulty continuing business with the US.
• Domestic shrimp farmers and fishers in the US may increase production and market shares as they will be much more competitive than before. However, they are unlikely to replace much of the total shrimp consumption as many production constraints are beyond price competitiveness.

Then, about shrimp consumption in the US: 

• As it is likely that shrimp prices in the US will increase if tariffs remain in place, what will be the impact on consumption? How price sensitive is shrimp consumption? What proteins will consumers shift to if shrimp becomes too expensive? What will this mean for overall shrimp consumption in the US? Angel Rubio at Urner Barry by Expana will have lots to say about this. 

Then, about what it will mean for shrimp-producing countries: 

• If the tariffs remain unchanged, Ecuador and other Latin American producers will likely aim to increase their capability to produce peeled and value-added products in high demand in the US. For Ecuador, this development comes at the right time as demand from China is uncertain, and developing a stronger position in the US  may help mitigate this risk.
• Although share prices of Indian stock-listed shrimp companies dropped significantly overnight, the Indian shrimp industry has often proven to be resilient. Indian exporters are likely to consolidate their market shares for products that Latin American suppliers are not ready to supply in the volumes that the US requires. Moreover, Indian suppliers are likely to double down on their historical strong ties with US retailers and, at the same time, increase exports to the EU and other markets for peeled and value-added products. They may also aim to diversify into other shrimp species and develop fish farming, processing, and export operations. The wider Indian shrimp stakeholder network will probably double down on developing a strong domestic demand, but this will take time.
• Producers in Indonesia and Vietnam are in the most challenging position due to high production costs, high US tariffs, and intense competition from Ecuador and India in other markets. Developing domestic markets will take time, and competing in different markets won’t be easy.