Impact of the diplomatic break with Taiwan on the future of Honduran shrimp

The shrimp sector in Honduras is facing a major crisis after diplomatic ties with Taiwan were severed in March 2023, and trade deals with China were not secured. The government, led by Xiomara Castro, chose to terminate a long-standing partnership with Taiwan that began in 1941, which has greatly affected the country’s aquaculture industry. This has resulted in significant financial setbacks and the shutting down of crucial shrimp export markets.

Consequences for trade and economy after ending ties with Taiwan

The Honduran shrimp sector experienced significant financial setbacks after severing diplomatic ties with Taiwan, which previously served as the primary market for its exports. Prior to this disruption, Taiwan received as much as 80% of shrimp exports from Honduras. The halt in the Free Trade Agreement with Taiwan led to a 20% tariff imposition, adversely impacting the foreign currency earnings of this industry. As reported by the National Association of Aquaculture Producers of Honduras (Andah), in 2024, the industry faced losses nearing $47.7 million, along with a reduction of 6.2 million kilograms in shrimp exports, attributable to the closure of access to the Taiwanese market.

Honduras’ attempt to establish a trade agreement with China has not managed to offset these losses. Although a preliminary agreement was announced to export 250 containers of shrimp, only two shipments were made. In addition, the prices offered by Chinese businessmen, around $4 per kilogram, are insufficient to cover production costs, which range between $6.30 and $6.50 per kilogram. This situation has created an economic imbalance that affects the sector’s profitability and limits its ability to recover.

Impacts on society and varied approaches

The collapse in the shrimp sector has severely affected society, resulting in the shutdown of multiple processing facilities and the elimination of numerous positions in areas like Choluteca and Valle. In response, the Honduran administration has initiated measures to broaden export destinations, investigating the potential to reinstate trade connections with Taiwan and launch new pathways to nations like South Korea. Taiwan’s Foreign Minister, Lin Chia-lung, has shown his country’s readiness to renew diplomatic ties with Honduras after the November presidential elections, recognizing the downturn of the shrimp sector after the rupture in 2023.

The present scenario demonstrates the outcomes of diplomatic and trade choices that have impacted the economic steadiness of the aquaculture industry. Relying on one market and the absence of successful agreements with new allies have made the industry susceptible, underlining the necessity for stronger and more varied tactics to guarantee its sustainability and support the nation’s economic growth.