Tariffs will benefit competitors, drive manufacturing offshore, NPA to testify today

By Hank Schultz

- Last updated on GMT

Tariffs will benefit competitors, drive manufacturing offshore, NPA to testify today
The Natural Products Association has released a transcript of the testimony president Daniel Fabricant, PhD will deliver today about President Trump's latest list of tariffs. If implemented as the list stands, the tariffs will eliminate jobs and drive manufacturing offshore in the dietary supplement industry.

Fabricant will deliver his remarks before a hearling in Washington DC put on by the office of the United States Trade Representative (USTR).  In the remarks, Fabricant will make these key points:

Tariffs will mean fewer businesses and fewer jobs

It’s not hyperbole to say that many small businesses within the industry will be forced to close their doors. These tariffs are simply unsustainable and unaffordable for them, since China is the single largest global supplier of safe, reliable, and cost-effective raw materials for their products.

Second is that for the dietary supplement industry these tariffs could have the exact opposite result of their purported intent.  They could actually reduce finished-product manufacturing jobs here in the US and send those jobs overseas, as it would be cheaper to do that than to pay the tariffs being proposed. 

Finally, this policy would benefit not American businesses but competitors located in Europe, Asia or South America that will not have to deal with the costs and dislocation that would come with the imposition of these tariffs.

“The prepared remarks that we released, except for a few edits, is what I will say at the hearing.  Then there may be some questions from the USTR staffers.  The questions will likely revolve around, for those ingredients coming mostly or soley from China, how long would it take for a new supply to be brought online, and be brought to a level to accommodate an entire industry,” ​Fabricant told NutraIngredients-USA.

Amino acids, vitamins could be affected

Fabricant said that as far as amino acids are concerned, some NPA members have already floated the idea of moving their finished product manufacturing operations to China in order to get access to these raw materials without financial penalty. The same might hold true for products containing vitamins, which of course would affect a huge swath of the industry.

“We do have a few domestic sources of vitamins, but the scale and cost are the questions,”​ Fabricant said.

Exemption process is uncharted territory

NPA will also be asking for more clarification of what standards will be applied in deciding which of the many of hundreds of line items on the list should get an exemption.  Not for many decades (if ever), have new tariffs come online at this speed and in this volume, so it’s uncharted territory, Fabricant said.

“There is no ‘Office of Exemptions,’ within the overall Department of Commerce or within USTR,”​ Fabricant said. “For information about potential exemptions, USTR is really going to be looking to the trade organiztions.  That will be a big lift for any trade organiztaion, and we are engaged with our members in getting that done.”

Fabricant said that the dietary supplement industry is just one of many with potential concerns about the tariffs.  And it is far from the largest one.  But he said he’s confident the industry can make its voice heard.

“Compared with the steel industy, even with our billions in sales our industry pales in comparison, but we are still part of the picture,” ​he said.

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