After the new tax rate takes effect, the market share of pangasius in the US will change depending on the price competitiveness after the tax. The Vietnamese shrimp industry will not be greatly affected, because the main shrimp exporting countries are India, Ecuador, Indonesia, and the price of Vietnamese shrimp is higher than the price of domestic shrimp in the US.

The seafood sector in general, especially the pangasius industry, will be significantly affected by differences in trade policies after Mr. Trump is re-elected as US President. From the perspective of Vietnamese seafood exporters, the possibility of the US applying new tariff measures on the seafood industry is not impossible. However, if this happens, the expected tax rate will not be too high, because the value of US seafood imports and exports accounts for a small proportion of the country's total trade turnover.

Data in the period 2021-2023 shows that the value of US seafood exports reached an average of 7.1 billion USD, equivalent to about 0.4% of the total value of this country's exports. On the contrary, the value of US seafood imports reached an average of 30.7 billion USD, accounting for about 1% of the total value of imported goods.

This shows that the seafood industry is not a major sector in the US trade balance, leading to the imposition of tariffs, if any, will be limited in nature and will not have a large impact on the total trade turnover of the US economy.

In addition, historically, the US has never applied a uniform tax policy to the entire seafood industry from exporting countries. Instead, the US often targets specific products or applies anti-dumping taxes to certain items that show signs of affecting the domestic market.

Therefore, if new tariff policies are introduced, they will likely only focus on specific items or countries, rather than being applied comprehensively.

Pangasius industry benefits more than shrimp industry if taxed

According to VDSC Research, the seafood industry will likely fluctuate as follows if the US imposes an import tax of 60-100% on China and 10-20% on other countries:

Specifically, before the tax period, seafood export output will increase sharply due to buyers stocking up in advance to avoid high taxes. However, the expected increase in shipping costs will erode profits.

After the tax comes into effect, the pangasius industry will benefit more than the shrimp industry. The pangasius industry is expected to take a 10% market share from tilapia depending on its price competitiveness after the import tax. The average pangasius price in the first 8 months of 2024 is currently 46% and 8% lower than the price of tilapia (85% from China) and the price of Alaska pollock (domestic US) respectively.

Of these, Alaska pollock production can replace tilapia production because the output of pollock exported is equivalent to the output of tilapia imported by the US.

US Alaska pollock export prices and tilapia prices are higher than pangasius prices (USD/kg)

The US Alaska pollock fishing quota currently stands at 1.5 million tonnes per year. Of this, the US exports an average of about 100,000 tonnes per year, mainly to the EU market. However, when the new import tax is applied, US pollock will shift to domestic consumption, as the EU market is facing fierce competition from Russian pollock, which is priced about 5-10% lower. In addition, Russia's fishing quota is expected to increase by 7% by 2025, increasing price competition pressure.

In this situation, the pangasius industry will also face strong competition in other markets such as the EU and China, when it cannot export to the US. Russian pollock and Chinese tilapia both have price advantages, putting great pressure on pangasius to maintain market share.

Estimated export value of pangasius assuming changes in tax rates and other objective factors remain unchanged. Source: VDSC Research

Accordingly, Rong Viet Securities assesses that VHC is the enterprise that benefits the most if the US imposes an import tax of 60-100% on China and 10-20% on other countries because the US is the main export market. Meanwhile, ANV and IDI benefit less because the US market accounts for 10% and less than 5%, respectively. In the most positive scenario, VHC's parent company's after-tax profit in 2026 will reach VND1,872 billion, equivalent to EPS of VND9,307/share.

After applying the new tax rate, the pangasius industry is expected to benefit from price competitiveness, but the level of market share increase will depend on whether pangasius can maintain its price advantage after import tax.

On the contrary, the shrimp industry is unlikely to benefit greatly because it is not negatively affected by taxes applied uniformly in key exporting countries such as India, Ecuador, and Indonesia. In addition, the selling price of Vietnamese shrimp is often higher than that of domestic shrimp in the US, making price competitiveness more limited.

In addition, the demand for imported shrimp in the US is still very large due to insufficient domestic supply. According to the American Shrimp Processors Association (ASPA), the total output of US warm-water frozen shrimp in 2022 will only reach about 134 thousand pounds, equivalent to 7.4% of total market consumption demand.

This shows that despite the new tax rate, the US still has to import shrimp from other countries to meet domestic demand, keeping the imported shrimp market stable.

Source: Kinh Te Chung Khoan