Trump's Tariff and its Impact on Shrimp industry of India

The recent decision by US President Donald Trump to impose a 50 per cent tariff on Indian exports has dealt a substantial blow to India's seafood sector, with shrimp exports bearing the maximum brunt of the impact. The total duty on Indian shrimp exports to the US has risen to 58.26 per cent, including a 50 per cent reciprocal tariff (which includes 25 per cent of penal tariff imposed on India for Russian crude imports), 5.77 per cent countervailing duty, and 2.49 per cent anti-dumping duty. Hence this, almost 59 per cent tariff, is going to have severe economic repercussions across multiple dimensions of India's fast-growing Shrimp industry.

- PROF ANOOP KUMAR, IAS (Retd), Professor of Practice (Public Policy) IIM, Nagpur & Former Principal Secretary (Fisheries), Govt of Maharashtra

According to the Trump Administration, the tariffs are part of a broader US trade strategy aimed at imposing reciprocal duties on countries with which it has a trade deficit. The US administration has also linked the tariff hike to India's continued purchase of Russian oil, further straining bilateral trade relations. Hence possibilities of immediate roll back of the 50 per cent tariff seem quite bleak.

Impact Overview

Below is a concise overview of the major short term and medium-term impacts on India's large shrimp industry

Significant financial losses

India exported approximately $2.5 billion worth of frozen Vannamei (White) shrimp to the US in FY 2023-24, accounting for 92 per cent of its seafood exports to the US market.

The sudden spike in tariffs triggered devastating losses, particularly in Andhra Pradesh, which contributes nearly 80 per cent of India's shrimp exports. The state estimates a financial setback of around Rs 25,000 crore, severely affecting local aquaculture businesses and livelihoods in the entire Shrimp cultivation and export value chain.

Gujarat also suffered a major disruption, as U.S. importers have abruptly cancelled supply orders worth Rs 300 crore, pounding a harsh blow to the livelihoods of thousands of Shrimp farmers and shrimp exporters across the region.

Reduced exports and cancelled orders

Crisil Ratings in its study report (ref 1) has projected that India's shrimp export volumes to the United States will decline by 15-18 per cent in the current fiscal year due to a sharp increase in US import tariffs. In fact, it is learnt that about 50 per cent of export orders have been cancelled due to reluctance of the importers to bear the cost of enhanced tariff. Meanwhile, operating margins for Shrimp producers have narrowed to a decade low of 5 to 5.5 per cent, making shrimp business unviable for many seafood exporters.