Shrimp Industries in Ecuador, India, and Vietnam Face Potential Tariff Hikes in U.S. Market

In response to the recent release of preliminary determinations by the U.S. Department of Commerce (DOC), the shrimp industries in Ecuador, India, and Vietnam are bracing for potential increases in countervailing duties within the U.S. market. Unveiled on March 26, the findings from the DOC suggest that shrimp exporters in these countries, along with select individual companies, may have benefited from subsidies, resulting in an unfair advantage in the U.S. market throughout the entirety of 2022.

As a result, shrimp exports originating from Ecuador, India, and Vietnam bound for the U.S. are anticipated to encounter minimum countervailing duties once the determinations are formally published to the Federal Register. However, the rates may vary for individual companies within these countries, subject to the DOC’s final determinations, which are slated for release in September.

The preliminary determinations indicate that Ecuador may face a countervailing duty rate of 7.55 percent on all shrimp exports to the U.S. Noteworthy differences emerge at the company level, with Sociedad Nacional de Galapagos facing a rate of 1.69 percent, while Industrial Pesquera Santa Priscila is poised to confront a duty of 13.41 percent. Similarly, India is anticipated to encounter an overall countervailing duty rate of 4.36 percent, with Devi Sea Foods facing a slightly higher rate of 4.72 percent. Other companies such as Sandhya Aqua Exports, Neeli Sea Foods, Vijay Aqua Processors, and Neeli Aqua Farms are expected to confront a rate of 3.89 percent.

Vietnam, on the other hand, has been allocated the lowest duty rate of 2.84 percent. Soc Trang Seafood Joint Stock Company is also subject to the same rate, albeit one company, Thong Thuan Company, faces a significantly higher countervailing duty of 196.4 percent, based on “adverse facts available” as determined by the DOC. In contrast, Indonesia, the fourth country under investigation, was found to have subsidy rates below the threshold necessitating countervailing duties, according to the DOC’s assessment.

While the preliminary determinations provide valuable insights, the final decisions rest with the DOC and the International Trade Commission (ITC), expected in August and September, respectively. Following publication to the Federal Register, importers will be required to place cash deposits equivalent to the determined rates with U.S. Customs and Border Protection. Should the duties be implemented, the impacted shrimp industries in Ecuador, India, and Vietnam are forecasted to incur substantial additional costs. For instance, Ecuador’s estimated USD 1.4 billion in shrimp exports to the U.S. in 2022 could potentially face over USD 100 million in additional duties, excluding higher rates imposed on specific companies. The countervailing duties represent just one aspect of the ongoing investigations conducted by the DOC, with further proceedings anticipated in the near future.