For many years, the US has always been positioned within the group of Vietnam's largest seafood export markets. However, the proposal by the Office of the United States Trade Representative (USTR) to impose an additional 12.5% tariff on goods imported from Vietnam could place the seafood industry into a new challenge.

The US – a strategic market for Vietnamese seafood

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the US market is one of the “pillars” in the export activities of the Vietnamese seafood industry, contributing from 20 – 25% of the entire sector's total export turnover, maintaining a level of 1.8 – 2.1 billion USD per year. This is not only a market that brings high value but also holds special significance in affirming the competitiveness and product quality of Vietnamese seafood in the international arena.

In Vietnam's export structure, shrimp continues to be a key commodity. The US currently imports nearly 800 thousand tons of shrimp annually, while domestic production only meets about 14% of consumer demand. Vietnam currently accounts for about 8 – 9% of the volume and more than 10% of the value of the US's shrimp imports, ranking among the largest suppliers.

For pangasius, currently, about 92 – 93% of the catfish volume imported into the US originates from Vietnam. This figure demonstrates the almost irreplaceable position of Vietnamese pangasius in the affordable white-flesh fish segment in this market.

Similarly, Vietnam is the second-largest supplier of tuna to the US in the canned tuna segment, accounting for about 16% of imports. Commodities like squid, octopus, crab, bivalve mollusks, and other processed seafood are also increasingly expanding market shares thanks to their ability to meet quality standards, traceability, and the processing requirements of US importers.

Meanwhile, according to data from the US National Oceanic and Atmospheric Administration (NOAA Fisheries), about 70 – 85% of the seafood consumed in the US must rely on imported sources. In 2023, the US imported approximately 6.3 billion pounds of seafood for consumption. This indicates that the seafood import demand of this nation is not merely complementary but has become an essential factor to ensure food security.

Impacts not only on Vietnam

In international trade, the selling price is always one of the factors determining product competitiveness. For a seafood industry that inherently possesses profit margins that are not overly high, the additional 12.5% tariff rate is evaluated as quite substantial. And if this policy is applied, the import costs of US enterprises will increase correspondingly.

The group heavily affected first will be products with high price competitiveness such as frozen shrimp, pangasius fillets, and processed tuna. These are all commodities where buyers frequently compare prices across multiple supply sources. However, according to VASEP, imposing an additional tariff on Vietnamese seafood not only causes impacts for exporting enterprises but also backfires on the US market itself.

Unlike many industrial commodity sectors, seafood is an essential food item, directly tied to daily consumer needs. While US domestic production is insufficient to meet demand, the imported supply source plays a decisive role in maintaining market stability.

For the shrimp commodity, the US domestic harvesting industry primarily concentrates in the Gulf of Mexico and the South Atlantic region, with production heavily affected by weather, fuel costs, and environmental conditions. In contrast, farmed shrimp from Vietnam is capable of supplying year-round with large volumes and stable quality.

Similarly, Vietnamese pangasius is almost the dominant supply source in the imported catfish segment in the US. Increasing import tariffs could cause retail prices to rise, reducing consumers' access to a nutritious and reasonably priced food source. Supermarket chains, restaurants, catering services, and food processing enterprises in the US may also have to adjust business strategies, seek alternative supplies, or accept higher costs.

In other words, the additional tariff is not just an issue for Vietnamese exporters but also carries the risk of driving up costs across the entire food supply chain in the US.

Responding to challenges

According to experts, if this new tariff policy is enforced, the long-term impacts could be far more severe than the immediate effects. First is the risk of a decline in market share in one of the most vital export markets. When US importers are forced to diversify supply sources to mitigate risks, competitors like India, Ecuador, Indonesia, Thailand, or a number of South American nations could seize opportunities to increase their presence in the market. And once market share shrinks, regaining customers will be very difficult and costly, even if the tariff policy is adjusted in the future.

Second, the drop in orders could trigger a chain effect on the entire domestic production chain. Millions of laborers participating in farming, harvesting, processing, transporting, and ancillary service activities run the risk of being affected.

Third, increased competitive pressure could force enterprises to cut down investments in technological innovation, factory upgrades, value-added product development, and the execution of sustainable development programs. This could affect the long-term competitiveness of the entire industry.

To respond to current difficulties, according to VASEP, it is necessary to continue strengthening dialogues and policy advocacy with the US side to clarify the distinct characteristics of Vietnamese seafood products. Many commodities like pangasius, warmwater farmed shrimp, or processed tuna in reality do not compete directly with US domestic products but play a role in supplementing supply for the market.

Besides, it is necessary to petition the US side to consider an exemption mechanism for essential food groups, particularly products where the domestic supply does not adequately fulfill consumer demand.

Also according to VASEP, the Trade Remedies Authority of Vietnam (Ministry of Industry and Trade) needs to request the US side to recognize the compliance efforts of the Vietnamese seafood industry regarding labor, social responsibility, raw material traceability, the control of farming zones, fishing vessels, purchasing facilities, suppliers, and processing factories. Many Vietnamese seafood enterprises have applied social responsibility assessment programs, labor audits, and sustainability certifications according to the requirements of customers and importing markets.

The proposal to impose an additional 12.5% tariff on Vietnamese goods is placing the seafood industry before a new test. In the short term, the risk of a decline in orders and an increase in costs is present. In the long term, the industry may face the risk of losing market share and affecting millions of laborers in the value chain.

However, with its position as one of the world's leading seafood suppliers, along with a vast network of free trade agreements and an increasingly enhanced production capacity, the Vietnamese seafood industry still has grounds to overcome challenges. The vital thing is to proactively adapt, diversify markets, elevate added value, and continue to affirm its role as an indispensable link in the global seafood supply chain.

On June 2 (Washington time), the Office of the United States Trade Representative (USTR) announced investigation conclusions for 60 countries subject to investigation under Section 301 of the Trade Act of 1974. The USTR proposed imposing an additional tariff on all products from investigated economies, including Vietnam. The punitive tariff structure is divided into 2 tiers. Among them, Tier 1 is a 10% duty rate applied to economies that have enacted import bans, established commitments through a reciprocal trade agreement, or applied a partial control mechanism. Vietnam and the remaining economies are proposed for the application of Tier 2, a tariff rate of 12.5%.

Source: Tap chi Thuy san Viet Nam