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How would US tax reductions affect Vietnam's seafood exports?

13:58 | 12/07/2022

VCN - If the US Government removing some of the tariffs imposed on products, including tuna products imported from China, competition in the US tuna market will increase and many firms will face losing a market share to China, including Vietnamese enterprises.

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How would US tax reductions affect Vietnam's seafood exports?
Processing tuna for export. Photo: T.H

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the US is Vietnam's largest tuna import market, who are facing the highest inflation since 1981. This is causing the US Government to consider lifting some tariffs that are imposed on products, including tuna products imported from China, to help control the price increase of consumption goods in the US, curbing inflation.

If this is implemented, competition in the US tuna market will increase and many countries will face losing a market share to China, including Vietnamese firms.

According to statistics of Vietnam Customs, Vietnam's tuna exports to the US in the first five months of 2022 increased by 102%, reaching $251 million. In which, the export value of most tuna product groups increased over the same period, except for fresh and frozen tuna with HS code 03 (excluding frozen tuna meat/loin code HS0304).

Continuing to be the leading export market of many Vietnamese seafood firms, the value of tuna exports to the US during this period accounted for 54.3% of total exports. Currently, Vietnam's frozen tuna loin/meat products are taking a majority market share in the US.

According to the most updated statistics of the International Trade Center, in the first four months of 2022, the US decreased by about 1.4% in the value of tuna imports from Thailand with US$189 million, but they increased by more than 116% in value in mport frozen tuna fillets from Vietnam.

Currently, the average US price of imported tuna has increased to US$7.63 - 7.65 per kg, an increase of about one USD per kg over the same period in 2021. In which, the average import price of tuna products from Vietnam is at the highest level at the end of April 2022, reaching about US$11 per kg, up US$ 2.3 per kg over the same period last year.

It is notable that in the first half of the year, frozen tuna meat and loin exports increased the most by 184% over the same period. Other processed products, mainly frozen steamed tuna loin, increased by 22%.

According to the analysis of Ms. Ta Ha, tuna market expert of VASEP, Vietnam is currently the second largest tuna supplier in the US after Thailand, ahead of Indonesia and Ecuador. Currently, tuna supply from Vietnam accounts for 21% of total US tuna imports.

Previously, China was one of the five main sources of tuna for the US market. This country held a majority of the market share in the US HS16 frozen steamed tuna loin market segment, because its products are cheap.

However, from the end of 2018, the US increased import tax on tuna products imported from China to 10% and in 2019, the tax rate increased to 25%. This caused US importers to find alternative sources with more competitive prices, including Vietnam.

Therefore, the value of Vietnam's tuna exports to the US market in 2019 increased by 38% compared to 2018. In particular, Vietnam's processed tuna exports increased by 52%.

In 2020, due to the impact of the Covid-19 pandemic, Vietnam's tuna exports to the US market decreased in the first months of the year, before recovering and growing continuously.

In particular, the export of frozen tuna meat/loin to the US market continuously grew at a high rate over the same period last year. For canned tuna exports, due to the impact of the Covid-19 pandemic, the inventory of canned tuna in the US increased, so US imports of this product group decreased in 2021.

However, currently, food prices in the US are increasing and this is changing the consumption needs of the American people. Americans tend to switch to healthier and better-priced protein products like canned tuna.

The inventory of canned tuna in the US is at a low level, though this is expected to increase the demand for US tuna imports, especially canned tuna products or frozen steamed tuna loins, the raw materials for canned tuna production. US importers will look for cheap supplies, and China will be the best choice if President Biden remove tariffs for Chinese products

This will increase competition in the US market. Tuna exports to this market from countries such as Thailand, Vietnam or Indonesia will all be significantly affected.

By Le Thu/Quynh Lan