Market Reaction to Reciprocal Tariffs

Market Performance

Shares of Avanti Feeds and Apex Frozen Foods experienced significant declines, ranging from 7% to 19%, during Thursday's trading session. The drop followed US President Donald Trump's announcement regarding reciprocal tariffs on multiple nations, including India. Both companies rely heavily on exports to the US, making them particularly susceptible to policy shifts affecting international trade.

Impact of Tariffs on Shrimp Exports

The United States remains the primary destination for Indian shrimp exports, accounting for $2.4 billion out of India's total $5.6 billion export industry. Indian shrimp holds a 40% market share in the US. A considerable volume of these exports undergoes processing in Latin American nations before reaching the US market.

Trump's recent speech featured a chart outlining tariff rates for various countries. According to this chart, India imposes a 52% tariff on US goods due to factors such as currency policies and trade barriers. The US has implemented a "discounted reciprocal tariff" of 26% on Indian imports.

Company Financials

Avanti Feeds

• Revenue: 69% of total revenue originated from the North American market in the December quarter, a decline from 82% in the previous year's quarter.

Apex Frozen Foods

• According to the December quarter investor presentation, 52% of total revenue came from the United States.

Outlook for Indian Shrimp Exporters

With the newly imposed 45% tariff—comprising Anti-Dumping Duty (ADD), Countervailing Duty (CVD), and other levies—Indian shrimp is expected to become significantly more expensive in the US market. Consequently, shrimp exports to the US may decline as alternative markets such as China, Europe, and the Middle East are explored to offset potential losses.

Additionally, US supermarkets are anticipated to experience supply shortages within a short timeframe, leading to a reassessment of food pricing structures. The tariff breakdown includes an ADD of approximately 2%-4%, a CVD of around 5.8%, a universal baseline tariff of 10%, and the newly introduced reciprocal tariff of 26%, totalling 45%.

Summary

The US imposition of reciprocal tariffs is expected to significantly impact Indian shrimp exporters, particularly Avanti Feeds and Apex Frozen Foods, both of which generate a significant share from their earning from the United States. With rising costs due to the new tariffs, these companies will likely seek alternative markets to sustain their export volumes. Meanwhile, the US market may experience short-term supply disruptions as the new policies take effect.