Industry Wary as Trade Wars, Tariffs Unfold

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The evolving trade and tariff situations in China and elsewhere in the world are forcing supplement manufacturers to stay alert and adapt. What’s the likely impact on output, pricing, availability? Here are a few perspectives from across the industry.

Beth Lambert, CEO, Herbalist & Alchemist in Washington Township, NJ

“The ever-changing trade policy with China is undeniably having an effect on us because of the uncertainty it causes. We have to pay careful attention to large orders for single extracts made from herbs grown in China, rather than sell as much as we can, so we don’t disrupt production of our own formulas.

Some Chinese herbs don’t have equivalents grown in the U.S, so substitution is not an option. For example, Eleuthero Root is an important adaptogen and demand for significant amounts of our Eleuthero extract is high. But now that future supply and pricing are uncertain, we have to make sure we have enough for our own products first, which limits our opportunity for quantity sales.

We also don’t know if this changing landscape will cause import delays. For a small company like ours, potential disruption of availability, cost and timing of receiving supplies can be quite a challenge.

Trade relations between the US and China are not our only concern; we’re watching the fate of NAFTA closely as well. We have a substantial business relationship in Canada, so disruption of that trade agreement would create problems on the sales side. Changing trade policies genuinely do impact livelihoods of people like us.”

Scott Steinford, managing director, Trust Transparency Council, Spring, TX

“The dietary supplement industry is not directly impacted by the trade tariffs recently directed by China and the U.S. and the beginning of the trade war between the two nations. However, we cannot expect to be without indirect impact or angst for future more direct effect.

The initial list proposed by the Trump administration included some dietary supplement ingredients, notably CoQ10, B Vitamins, Vitamin E and others. The final tariff list, which took effect July 6, had these items removed. It is uncertain what logic led to the initial inclusion or eventual exclusion of the ingredients, so it is impossible to determine if these ingredients are permanently or temporarily excluded.

A real fear regarding the impact of a trade war is the potential modification it could have on the supply chain conversations which are occurring between the two countries.

The U.S. and China dietary supplement industries have developed a symbiotic relationship that has provided mutual benefits. It is well known the vast majority of ingredients used in the dietary supplement industry originate from China.

Many American dietary supplement companies have enjoyed the benefit of increasing ingredient supply from China as well as a welcomed finished product market. The U.S. dietary supplement industry is achieving benefit from both pre and post production contributions from China. Rising tension from a nationalistic emotionally charged rhetoric is almost certain to inject tension into the daily conversations occurring between companies from both nations.”

Jim Emme, CEO, NOW Health Group, Bloomingdale, IL

“Right now we’re preparing for the possibility that tariffs could be imposed on our incoming ingredients or on items for export. We have accelerated purchasing. We were accelerating it going back to the first round of tariff threats that dissipated.

We’re also staying in touch with the trade groups and trying to let the White House know what the economic impact can be on this.

If tariffs come in, let’s face it. Those charges are going to be passed on to consumers.

On the retail side, our Fruitful Yield vendors have been reaching out to us. Probably two-thirds have said we don’t see a problem yet. But if a 25% tariff does show up on our ingredients, we’ll have to pass along that increase.

Right now, it’s more planning than action. It’s a potentially hazardous situation right now. We’re keeping vigilant.

I’d say the percentage of our new business is at least one third from international this year. That’s what we’re seeing next year as well. Coming from Europe, the Middle East, Asia.”

 

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