DAY TO DAY ECONOMICS

CBS LINE

Volume 4(1)

The Shrimp That Took a Detour

When news arrived that the United States had raised import tariffs on Indian marine products, many people quietly smiled. The thinking felt simple and reassuring. If exports became difficult, fewer shipments would go abroad. If fewer shipments went abroad, more shrimp would remain at home. And if more shrimp stayed back, prices would finally soften. For once, a global trade decision seemed ready to favour local plates.

But nothing happened.

Shrimp prices stayed exactly where they were. Markets did not overflow. Menus did not change. The shrimp that was expected to settle down locally never showed up. Somewhere between policy headlines and dinner tables, it quietly vanished.

The explanation lies in how quickly markets react.

India is one of the world’s major seafood exporters, and shrimp sits right at the heart of that success. It is efficient to produce, widely demanded, and highly valuable abroad. For years, the United States absorbed nearly two-thirds of India’s shrimp exports. So when tariffs rose sharply in August, exports to the US did fall — by around fifteen to eighteen percent. On paper, this looked like a clear disruption. 

In practice, it was just a change of direction.

Instead of slowing down, India’s marine exports gathered momentum. September recorded an increase of nearly twenty-five percent, followed by another eleven percent rise in October. This had little to do with the US reconsidering its stance. Exporters simply looked elsewhere.

Shrimp didn’t stop moving.

It just chose a different route. 

With strong government support running into tens of thousands of crores, exporters moved quickly to explore alternative markets. Demand was waiting. China sharply increased its imports. Japan followed. Thailand absorbed far more than before. Europe opened its doors wider. The shrimp that once crossed the Atlantic now travelled eastward, carrying new labels and new destinations.

From a consumer’s point of view, this was puzzling. The expected surplus never arrived. Prices refused to budge. The reason is simple: in a globally connected economy, goods rarely wait around. When demand exists somewhere else, they move.

Economists describe this behaviour as trade diversion — a situation where trade shifts from one market to another rather than disappearing. In this case, the tariff shock did not eliminate India’s shrimp exports. It redirected them. While there was some new trade created, most of the adjustment came from diversification. India didn’t suddenly sell much more shrimp overall. It sold it to different buyers.

For exporters, this was a relief. Earnings were protected. Dependence on a single market reduced. New relationships were built. For consumers, it was a mild disappointment. The hoped-for price drop never arrived because the shrimp never stayed back long enough.

This is how economic adjustments usually unfold. Major policy changes made far away rarely produce dramatic, immediate effects close to home. Instead, they reshape routes, alter destinations, and quietly rearrange flows. The movement happens smoothly, efficiently, and often out of sight.

And that is why shrimp never became cheaper.

It didn’t disappear.

It simply took a detour.

Dr.K.Muraleedharan & Joshni.S