New Chinese tariffs target $60 billion in US trade; supplements escape for now
In July Pres. Trump turned up the heat in the trade dispute by releasing a list of new 10% tariffs targeting $200 billion trade with China. This most recent release is a direct response.
The four lists, which at the moment are still only available in Mandarin, were released today by the Chinese government. They include about 5,200 line items and account for about $60 billion in trade.
The four lists are grouped as follows:
- A 25% tariff on 2,493 items
- A 20% tariff on 1,078 items
- A 10% tariff on 974 items
- A 5% tariff on 662 items.
Supplement products not affected per se
An initial run through of the lists by industry stakeholders fluent in Chinese indicated that there were no line items that specifically targeted the dietary supplement industry. Nevertheless, the development is not welcome.
“This is not altogether surprising,” Dan Fabricant, PhD, president of the Natural Products Alliance told NutraIngredients-USA. Fabricant will be testifying at a hearing later in August to present the case of the burden that Pres. Trump’s latest tariff expansion will place on small business holders.
“If this is a sign that negotiations might begin on these tariffs, we look forward to playing our role in that. We want to do whatever we can to avoid unintended consequences,” he said.
Scott Steinford is the executive director of the CoQ10 Association and the Natural Algae Astaxanthin Association, both of which have Chinese members. Steinford’s associates did the initial comb through the lists.
Steinford said that it was unlikely that the new tariffs would affect US supplement companies, as the issue has so far been confined mostly to raw materials and bulk goods. The trade going from the US into China in the supplements industry is mostly in finished goods, with but a few exceptions (ginseng, for one).
But he said the broader issue is the potential poisoning of the business well, just as the market in China appeared to be opening up to more US made goods, Steinford said.
“I think this issue will implicate the industry whether we are on the list or not,” he said.
“This trade war has not brought the benefits that anyone hoped it would, in my opinion. I have talked with no one in the supplements industry on either side who supports this trade war,” Steinford said.
Killing the ‘made in USA’ golden goose?
Dietary supplements with a ‘made in USA’ positioning have been in demand in China. The first big winners in this development have been network marketing companies. Both Herbalife, which is the world’s largest MLM devoted primarily to nutritional products, and USANA Health Sciences, have enjoyed large and growing sales in the Chinese market. Steinford said recently it appeared that other supplement companies could get in on the fun in a big way, too.
“The MLMs were at first the primary way to enter the market,” Steinford said. “But the system has been evolving to potentially be open to more of our products.”
Steinford said that at this critical juncture, the last thing that would be helpful is for the US to be seen as putting itself in the position of telling China what to do. Tensions are already high over territorial disputes in the South China Sea, and the tariffs issue could link up with that.
“The attitude and opinions of the people I work demonstrate that a nationalistic pride has been aroused and is growing. That is something we should keep in mind because on this side we are still looking for ways to enter that market,” he said.
