Vietnam has an annual seafood export turnover of about 2 billion USD to the United States

46% Nightmare: Vietnam's Seafood Industry Braces for Devastating US Tax Hike

VIET NAM
Tuesday, April 08, 2025, 05:40 (GMT + 9)

Crippling Tariffs: US Tax Bomb Threatens Vietnam's $2 Billion Seafood Empire

The Vietnam Association of Seafood Exporters and Producers (VASEP) has urgently appealed to the Vietnamese government following the US announcement of a reciprocal import tax of up to 46% on Vietnamese goods. VASEP's Official Letter No. 46/CV-VASEP highlights the potentially devastating impact on Vietnam's seafood industry and outlines crucial proposals for government intervention.

On April 3, 2025 (Vietnam time), a US announcement revealed Vietnam as one of over 180 economies facing substantial reciprocal import taxes, with rates reaching a crippling 46%. This move poses a severe threat to Vietnam's key economic sectors, particularly its significant seafood industry.

The US: A Crucial Market Under Threat

Vietnam's annual seafood exports to the US, valued at approximately $2 billion, represent a fifth of its total seafood export value. The US is not only Vietnam's largest seafood market but also a key driver for the sector's growth. This market consumes 70% farmed seafood (shrimp, pangasius, mollusks, freshwater fish), supporting the livelihoods of hundreds of thousands of farmers, and 30% wild-caught seafood, vital for countless Vietnamese fishermen. The US is the top importer of Vietnamese shrimp and tuna and the second-largest for pangasius.

Livelihoods on the Line

Over 400 Vietnamese enterprises currently export or plan to export seafood to the US, often fulfilling large, high-value orders. The prevalent DDP (Delivered Duty Paid) shipping method means Vietnamese businesses bear all upfront costs, including transportation, insurance, and taxes, before receiving payment. The proposed 46% tax rate raises serious concerns about their ability to compete and the potential for massive losses on shipments already en route or planned.

VASEP's preliminary data from April 3 indicates approximately 37,500 tons of seafood are currently being shipped to the US, with another 31,500 tons projected for export in April-May 2025, and signed orders for 2025 totaling around 38,500 tons. These staggering figures represent not just financial assets but the threatened livelihoods and investments of Vietnamese farmers, fishermen, and businesses who have geared their production towards the US market.

Policy Ambiguity Creates Major Risks

The US policy outlines a tiered tax increase: a 10% additional tax on goods loaded or withdrawn between April 5th and 9th, 2025, and a drastic 46% rate thereafter. Crucially, exceptions exist for goods already in transit before these dates. However, the ambiguity lies in whether US Customs will assess taxes based on the departure or arrival date. If arrival after April 9th triggers the 46% tax, shipments already at sea will face this exorbitant levy, causing immense financial damage to Vietnamese exporters operating under DDP contracts with prices based on current low tax rates (0% or anti-dumping rates of 5.5-7%).

A 46% tax rate significantly exceeds those imposed on competing seafood exporting nations (India: 26%, Ecuador: 10%, Indonesia: 32%, Thailand: 36%), effectively jeopardizing Vietnam's competitiveness in its most vital market.

VASEP's Urgent Recommendations to the Government

In response to this critical situation, VASEP urgently requests the Prime Minister and relevant ministries to:

1. Negotiate a clear timeline for the new tax implementation with the US government, urging them to instruct US Customs to use the "loaded onto vessels" date (Bill of Lading date) as the export date for tax assessment.

2. Negotiate a significant reduction in the tax rate, emphasizing that:

   • Vietnam is not a currency manipulator (according to the US Treasury).
   • Trade surplus reflects global supply chains involving US companies.
   • Seafood is an essential consumer good, warranting a tax rate considerate of US consumer income.
   • Vietnam imports substantial US soybean meal for its aquaculture industry at a 0% tax rate.

VASEP proposes negotiating a differentiated tax rate based on specific seafood product categories and suggests Vietnam proactively reduce its import tax on US seafood to 0% (especially for key products like shrimp and tuna, where US imports are negligible) to create leverage for reciprocal zero-tariff treatment from the US.

VASEP also advises member businesses to:

• Carefully manage shipment timing to avoid the 10% tax (do not ship April 5-9) and the 46% tax (do not ship after April 9).
• Await government instructions before making further export decisions.

Source: VASEP

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