Opinion
India’s seafood exports are stuck on a raft of uncertainty
Summary
- Even if Trump’s tariff flip-flops didn’t leave Indian seafood exporters queasy, the resultant decision paralysis has been bad enough. Exporters need a compass. So does US trade policy.
Winds blowing hot and cold from Washington this April have left India’s seafood exporters at sea, afloat but gripped with uncertainty. US President Donald Trump’s attempt at a trade reset has meant this sector saw tariff rates on shipments swell, crest and crash from being nearly duty-free to 10% on 5 April, then to 26% four days later, and now back to 10%—at least till early July.
Even if it did not make exporters queasy, the US policy flip-flop made it hard for them to chart out a course. America is their biggest export market, accounting for over a third of Indian shipments by value. In 2023-24, the US imported over $2.5 billion worth of seafood from India, of which 92% was frozen shrimp.
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Much of this business is contract led, with US-based importers bearing the risk of tariff hikes, but not all of it. Plus, the fine-print could be invoked in some cases to cancel orders or reject consignments upon arrival. Associations of seafood exporters have shared stories of despatch disruption and deep anxiety.
Before Trump’s 90-day pause of ‘reciprocal tariffs’ that were set to vary from one country’s exports to another’s, Ecuador’s shrimp had a notably lower levy and thus an edge over India’s. While the US baseline tariff of 10% that treats all countries alike stays in place, what will happen eventually is far from clear.
Sea cargo typically takes a month to reach America’s west coast and longer to dock along the east coast. For many Indian exporters, complexity arises from value chains that span borders. Some are seafood suppliers to businesses in East Asia that package it for onward export to the US. Others operate their own networks of processors and distributors designed to take advantage of global expertise, lower operating costs and minimize tariff charges.
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Many send raw cargo to Vietnam and/or Thailand for value addition and re-export to America. This not only takes time, but also advance planning. Since Vietnamese and Thai exports could yet face US tariffs of 46% and 36%, respectively, higher than the 26% rate proposed for Indian exports, those who run these chains are caught in a bind. They may need to rejig operations and find new markets, or risk being priced out of America, unless bilateral talks secure relief. Smaller players hope to gain share from big exporters by adjusting faster.
Unfortunately, nobody knows what to base business decisions on. Even freight rates could rise if there’s a broad rush to ship stuff to America during its 90-day tariff pause.
Of course, it’s not just seafood exporters that have been left directionless. Decision paralysis caused by tariff uncertainty is a global affliction. As if the US retreat from free trade was not bad enough, its tariff flip-flops seem arbitrary and often reactive. In other words, neither an ideological bent nor any strategic intent can offer useful clues to where its policy is headed. All that’s clear from the Lovecraftian dread that tariffs have spread around the world is that America may be taking too risky a policy bet for its own good.
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As the Cold War’s victor, the US had demonstrated the superiority of a market economy. Today, it could turn into a sort of command economy itself, with key aspects of its resource allocation sought to be shaped by the White House. And the more that whimsy seems to trump a coherent plan for such a significant economic shift, the riskier it is. Everyone else is being forced to cope. Not just seafood exporters stuck on a raft without a compass.
