The shrimp sector in Ecuador is experiencing significant impacts from recent measures imposed by the United States, its second-largest market after China. As of May 30, the industry must pay USD 15 million monthly due to allegations of unfair trade practices. This hefty fee is currently the only means to secure entry into the US market.

US Department of Commerce Rulings

The US Department of Commerce implemented its second preliminary ruling regarding tariffs on Ecuadorian shrimp, mandating a 10.58% tariff if the government confirms that Ecuador engaged in “dumping”—selling shrimp at prices lower than local markets. This follows a previous ruling in April that imposed a 2% tariff due to alleged subsidies.

José Antonio Camposano, president of the National Chamber of Aquaculture (CNA), highlighted the financial strain this situation places on the industry. The additional payment required to ensure market access is calculated based on the combined tariffs (averaged to 13%) on the annual export volume to the US, which amounted to USD 1,251 million in 2023. This calculation results in approximately USD 15 million per month, or USD 180 million annually. Camposano noted that this figure might change pending a review of the dumping rate requested by the Chamber.

Concerns Over Market Diversion

Beyond the financial burden, there are fears of significant commercial repercussions. Camposano expressed concern that these tariffs could divert trade, causing Ecuador to lose market share in the US. The imposition of these rates, pending ratification in October, already places Ecuador at a competitive disadvantage compared to other shrimp-exporting countries like India and Indonesia. Importers may opt to purchase shrimp from these countries instead.

The uncertainty surrounding these tariffs compounds the industry’s difficulties. While the hope is that tariffs might decrease in the final determination, they could also increase or extend beyond the intended period. This scenario adds to the industry’s challenges, which have already been exacerbated by declining sales in the Asian market.

Decline in Sales and Revenue

The National Chamber of Aquaculture reported a 16.84% drop in shrimp sales volume through March, compared to the same period last year, leading to an 8% reduction in revenue. This decline is partly due to a 40% revenue decrease from China, the primary buyer of Ecuadorian shrimp.

The current disputes began in October 2023, when a group of US businessmen called for an investigation into Ecuador’s alleged unfair practices. These allegations include supposed subsidies in electricity rates and other incentives aimed at attracting investments, which the CNA argues have been misrepresented.