The list of proposed tariff goods was released late Tuesday, and includes many dozens of products in many categories. As the trade issue began with Trump’s call for protective tariffs on steel and aluminum, many of the tariff line items pertain to these products. Many others pertain to industrial and mechanical equipment, such as machine tools and gas turbine engines. Still others pertain to electronic equipment, some of which might have implications in the dietary supplement sector such as analytical chemistry apparatus.
Dietary ingredients singled out
But it is the few dietary ingredients called out specifically that are of the greatest concern for the supplement industry. If the goal of the tariffs is to protect American jobs, singling out dietary ingredients for which there is no real alternative supply outside of China won’t get that done, said Scott Steinford, executive director of the CoQ10 Association. Steinford said the supply of this ingredient is becoming increasingly China-centric.
“Previously we could have said that 90% of the world’s supply of CoQ10 was coming from China. We could now conceivably say that 100% of it comes from China,” Steinford told NutraIngredients-USA.
“There are a lot of people involved in selling CoQ10 here in the US when you take all of the brand holders into account. This tariff isn’t going to help them,” he said.
“This is something that could impact US health (if fewer consumers use the supplement) but won’t help protect US jobs,” Steinford said.
The tariff proposal includes a comment window extending to mid May, Steinford said. The organization will be preparing comments, he said. Final implementation of the tariffs would likely come in late May at the earliest, he said.
Potential reaction from Chinese consumers
Steinford, who has a long history in the industry in working with Chinese suppliers, said one of the dangers of the present course on trade has less to do with the ingredients in question than it has to do with the overall perception of made in USA products. After all, an increase in the cost of CoQ10 will have only a minor effect on the price of the finished good on the shelf. But that little bit the US Treasury will collect at the border might be lost many times over if Chinese consumers sour on American products.
At the moment there is a health halo around a ‘made in USA’ claim, as Chinese consumers don’t place as much trust in the purity of their domestically manufactured health products. But that trust isn’t necessarily set in stone, Steinford said.
“I think the feeling internationally is that our administrations and their policies are temporary at best. I think the Chinese have been very patient on this issue, but at some point that patience is going to break,” Steinford said.
“There could be an official response from the Chinese government but what I’m more concerned about is if there is an emotional response from a proud, nationalistic people,” he said.
Troubling catchall category
Along with CoQ10 and the letter vitamins previously mentioned, Loren Israelsen, president of the United Natural Products Alliance, noted in a communique late Tuesday to members that there is a catch-all line item that could apply to many dietary ingredients.
That item is No. 30029010, “Ferments, excluding yeasts.” As many dozens of dietary ingredients are produced directly via fermentation or include fermentation as one of the processing steps, Israelsen said it’s unclear at this time which ones risk having a tariff slapped on them.
"These are early days in what could be a significant trade war. It’s our sense that if things continue to ratchet up, other sectors will be engaged. China’s public statements that its tariffs could include soy and other commodities, such as pork and pork products, makes it clear that this is a political issue and not an economic one. Trade relations with China are clearly very important to the dietary supplement industry. Our concern is that if the trade dispute expands, in addition to a number of dietary ingredients already targeted, it could begin to include plants and botanicals. Regardless, UNPA will continue to build the U.S.-China industry bridge as it’s an indispensable part of our future—for both sides,” Israelsen said.
Reactionary tariff
At least one reactionary tariff has already hit the US dietary ingredients industry. The Chinese government has placed a 15% tariff on imports of US grown ginseng. American ginseng is prized in China and 95% of the US crop is exported to that country. Almost all the American ginseng grown in the US is grown in one county in central Wisconsin. Marathon County sits at the right latitude–45 degrees north. And the sandy soil, the remnant of a glacial lakebed, is ideal for growing high quality, cultivated ginseng under shade cloths.
According to Wisconsin Public Radio, Will Hsu, vice president of Hsu's Ginseng Enterprises, one of the county's longtime growers, said the tariff could push some Chinese importers to seek out Canadian-grown ginseng.
"I think the global competitive threat was already there because you have famers that are growing American ginseng in China and you have them also growing in Canada, and so we already compete with growers there. This makes it harder for us to compete in one of our major export markets," Hsu said.
–