US trade body the Natural Products Association (NPA) has warned that the Trump Administration’s plans to impose tariffs on key ingredients for nutritional supplements and vitamins would severely damage business prospects for the US dietary supplement industry, and risks putting “most small firms out of business”.
Earlier this month the White House released a new list of around 1,000 items coming from China that would carry additional 10% tariffs. The list includes a number of key ingredients used in supplements manufacturing.
The NPA’s warning is set out in a letter to United States Trade Representative Robert E. Lighthizer.
The NPA’s president and CEO of NPA Daniel Fabricant will testify at an upcoming hearing at the Office of the United States Trade Representative (USTR) on August 20-23 where he will present the Association’s views and the potential impact of the proposed tariffs on its members, small businesses, and consumers.
Fabricant commented: “We strongly urge the Administration to rethink its trade policy that will cause a financial burden on small businesses and the three quarters of American consumers who use nutritional supplements. Our members, made up largely of small businesses, are deeply concerned that tariffs on dietary ingredients and finished supplement products will make it impossible to remain profitable without raising prices on consumers. We look forward to sharing our views in more detail with the Administration in the coming days.”
The NPA has asked the Administration to exempt 57 HTS codes (the system used to classify a good based on its name, use or material) representing hundreds of dietary ingredients, from tariffs it said would impose unintended consequences in the dietary supplement and natural products industries.
In its testimony, the NPA will warn that:
• Many dietary ingredients used in the domestic manufacture of dietary supplements are “dependent on sourcing in China” because it is viewed as the only country which can handle ingredient sourcing supply on the scale needed by the US market.
• Imposing these tariffs on dietary ingredients would result in significant economic harm and financial impact to US companies, and that If small- and medium-sized companies were forced to obtain dietary ingredients from alternative sources domestically or abroad, most small- and some medium-sized companies would go out of business. Some medium- and large-sized companies would meanwhile set up finished product manufacturing operations in China.
• Imposing tariffs on dietary ingredients would result in a significant financial burden for consumers who would be likely to bear the increased costs of products as well as reduced product choice.
• The proposed tariffs would create major disruption to raw ingredients supply to US supplements firms and force up costs, handing competitive advantage to European, South American and Asian competitors.
Main image: Flag of the People’s Republic of China crashing with flag of the United States of America, Iecs, CC BY 3.0