Indian Seafood Exporters Face $3.4 Billion Loss Due to Trump's Tariff Hike

The Indian seafood export industry is facing a potential loss of Rs 24,000 crore due to the US doubling its tariffs on Indian seafood imports to 50%. This move is expected to impact the industry's 20 million workers, with farmers potentially halting seeding operations. Indian exporters fear they will struggle to compete with Ecuador, which pays only 10% import duty in the US market. Executives are hopeful that big buyers like Walmart and Costco will negotiate favorable terms with Indian exporters.

The Indian seafood export industry is facing a potential loss of Rs 24,000 crore due to the US doubling its tariffs on Indian seafood imports to 50%. This move, effective from August 27, is expected to significantly impact the industry's 20 million workers, with farmers potentially halting seeding operations. Indian exporters are bracing for the additional burden, with existing duties already at 15% [1].

Indian seafood exports, valued at Rs 60,000 crore, are heavily reliant on the US market. The US accounts for 40% of India's total shrimp exports, with frozen shrimp exports accounting for more than Rs 40,000 crore [1]. The new 50% tariff is expected to make Indian seafood less competitive in the US market, as Ecuador, India's closest competitor, pays only 10% duty [1].

Executives from the Seafood Exporters Association have expressed concern over the impact of the tariffs. "The seafood industry will be in dire straits affecting 20 million people. The industry will come to a standstill as we cannot absorb the 15% increase in tariffs," said Pawan Kumar G, president of the association [1].

While the immediate impact of the tariffs on India's GDP is expected to be negligible, the long-term effects could be significant. The PHDCCI study estimates that the 25% tariffs will impact only 1.87% of India's total global merchandise exports and 0.19% of its GDP [3]. However, the seafood industry, which is a key sector for India's exports, is likely to be disproportionately affected.

To mitigate the impact, the industry is exploring various strategies. The Federation of Indian Export Organizations (FIEO) is set to collaborate with Amazon through a Memorandum of Understanding (MoU) on August 6, aiming to bolster support for Indian exporters in reaching global markets via cross-border e-commerce [4]. Additionally, the industry is looking at negotiating bundled-pricing deals and investing in joint ventures with US firms to produce tariff-sensitive goods on-shore [3].

Big buyers like Walmart and Costco are expected to play a crucial role in negotiating favorable terms with Indian exporters. The US accounts for between 17-20% of India's exports, making it less vulnerable than countries such as Mexico, 80% of whose exports go to the US [2]. However, the 50% tariff will be a significant blow to Indian industries such as gems and jewelry, apparel and garments, and seafood/shrimp [2].

As the US consumer will ultimately bear the higher prices for imports, the industry is hopeful that the tariffs will lead to a more favorable trading environment. The US consumer is expected to pay higher prices for imports, as no exporters from any country or importer in the US will trade at a loss even if the margins are squeezed [2].

References:
[1] https://economictimes.indiatimes.com/news/economy/foreign-trade/trumps-25-tariff-puts-indias-60000-crore-seafood-export-industry-under-pressure/articleshow/123002649.cms
[2] https://timesofindia.indiatimes.com/business/international-business/trump-doubles-down-on-india-tariffs-raises-it-to-50/articleshow/123145518.cms
[3] https://www.business-standard.com/pti-stories/national/negligible-impact-of-us-tariffs-on-india-s-gdp-exports-study-125080600955_1.html
[4] https://economictimes.indiatimes.com/news/economy/foreign-trade/fieo-to-sign-pact-with-amazon-to-support-exporters/articleshow/123116116.cms