Opportunities for Vietnamese shrimp, pangasius, and tuna from the US-China trade war

Opportunity when Chinese goods will be expensive because of taxes

Shrimp, Vietnam's main export product, is a product with many opportunities from the $200 billion package that the US plans to impose tariffs on Chinese goods, including furniture and agricultural and aquatic products. Accordingly, five Chinese shrimp products will have their taxes increased from 0-5% to 10%. "These are all strong products of Vietnam in the US market, so we have the advantage of increasing exports of these products to the US. Vietnamese shrimp has a certain position with US consumers, so when the supply from China decreases, US importers will choose Vietnam as an alternative source," VASEP's report said optimistically.

The US is currently the third largest importer of shrimp from Vietnam, accounting for 15.6% of total exports. For the US, Vietnam is the fifth largest shrimp supplier, accounting for about 8.5% of shrimp imports. As of May 2018, Vietnam exported nearly 18,000 tons of shrimp to the US, worth nearly 203 million USD. China is right behind Vietnam with more than 16,000 tons, worth 115 million USD.

When the US imposed a 10% tax on Chinese whitefish products - this was an opportunity for more Vietnamese pangasius to reach American consumers.

Pangasius also has the opportunity to increase its market share in the US when the country imposes a 10% tax on Chinese whitefish products. In this product line, China is exporting a large amount of fish to the US. In 2017, the US imported nearly 134,000 tons of products worth 426 million USD, of which China alone accounted for 75% of the market share and nearly 45% of the entire US whitefish market. Chinese pangasius is subject to a tax, the price is higher, this is an opportunity for Vietnamese pangasius to reach more US consumers.

China is also the fifth largest supplier of tuna to the US market. In 2017, the US imported 23,500 tons of tuna worth 127 million USD from China. Many Chinese tuna products are also on the tax list. This will facilitate other countries, including Vietnam, to increase supply to the US market.

Worry about Chinese businesses "borrowing" the road

According to Vietnam Customs, China is the fourth largest shrimp import market of Vietnam, accounting for 15% of total export value. In the first six months of this year, Vietnam's shrimp exports to China reached nearly 246 million USD, down 13.2% compared to the same period last year. Up to 94% of Vietnam's shrimp exports to China are in raw form (frozen, fresh). China processes shrimp for export to countries including the US. With the high tax rate that the US will apply, it is likely that Chinese businesses will reduce purchases of Vietnamese shrimp, affecting output.

However, the US can also create more technical barriers to Vietnamese agricultural products, so we need to proactively guard against them.

However, that is not the main concern because many businesses believe that a large amount of Vietnamese shrimp is exported to China as temporary imports for re-export from India. The most worrying thing is that both the US and China are suspicious of each other, so they will set up stricter technical barriers for Vietnamese goods when exporting to both markets. There is also a possibility that Chinese shrimp businesses will "borrow" Vietnam to get origin and export to the US. However, this is also an opportunity for Vietnamese businesses to affirm their position, improve quality and make product origin transparent to gain market share from China in the US market.

“The US-China trade war will increase production cost pressure when the exchange rate fluctuates. On the other hand, the “war” is unpredictable and its impact is still an open question. According to experts, businesses, especially those in the shrimp industry, should consider this an opportunity to affirm their own position, including improving product quality, increasing initiative in trade and making greater use of signed FTAs ​​(free trade agreements). Businesses need to proactively update the list of goods subject to tariffs by both the US and China as well as the increase in the exchange rate of the USD and the Chinese Yuan to have timely countermeasures,” VASEP recommended.