A partial trade agreement signed by the United States and China on Jan. 15, 2020, will reduce U.S.-imposed tariffs on some imported Chinese goods used by U.S. dietary supplement and food companies, but it will leave tariffs on other commodities in place, at least for the short term.
The “Phase One” agreement reportedly covers many issues that have been at the heart of the U.S.-China economic conflict; a summary Fact Sheet issued by the office of the U.S. Trade Representative (USTR) is here.
Of most direct interest to AHPA (American Herbal Products Association) members and the herb and supplement trade, USTR issued a pre-publication notice to announce that certain ad valorem tariffs that have been imposed on Chinese exports over the last two years will be reduced, effective on Feb. 14, from 15 percent to 7.5 percent. More specifically, the reduced rate will apply to all of the commodities identified by formal HTSUS (Harmonized Tariff Schedule of the United States) numbers in Annex A (and by informal descriptions in Annex B) in USTR’s Federal Register notice of Aug. 20, 2019. [Note that in the Aug. 20 notice the ad valorem tariff level was proposed to be 10 percent, but the rate was subsequently increased to 15 percent in a separate notice issued by USTR on Aug. 30, 2019.]
In comments filed on this matter, AHPA listed numerous of the affected commodities that are used in dietary supplements and other herbal products manufactured and marketed in the United States. These include, among many others, various forms of a number of specifically identified spices (e.g., pepper; capsicum; cinnamon; nutmeg; cardamoms; seed of coriander, cumin, anise caraway or fennel; ginger; saffron; turmeric; vanilla beans; etc.); fruits (e.g., lemons; limes of the Citrus aurantifolia variety; and other citrus fruits); and other botanicals (e.g., black and green tea; kola nuts; mate; chicory root; ginseng; numerous essential oils; etc.). In addition, the reduced tariff rate will apply to several general HTSUS categories that cover many botanical extracts.
“Importers of any commodity subject to the new tariff reduction may consider delaying imports until Feb. 14 when the lower rate goes into effect. AHPA has been informed it is also possible to defer entry of imported goods for up to 15 days to take advantage of the lower rate, so companies may consider consulting with qualified customs brokers and international trade attorneys to assess the viability of this strategy to their particular circumstances.”
USTR’s action to reduce certain tariffs following execution of the Phase One agreement applies only to those HTSUS commodities identified in the above cited Aug. 20, 2019, notice. At least for now, previously established tariffs of up to 25 percent will remain in place for numerous other commodities, and they include, for example, the following: glass and plastic packaging materials; whey protein concentrates; numerous dried vegetables (e.g., carrots, garlic, onions, tomatoes, miscellaneous mushroom species, etc.) and fruits (e.g., barberries and citrus peel, among others); and numerous other plant-based ingredients and minerals used in supplement products.
The Natural Products Association (NPA) also commented on the matter.
“The vast majority of the tariffs—which are taxes paid by Americans, and not China—will remain in place, continuing to hurt our economy,” noted the NPA, in an email. “The latest market research points to the dietary supplement industry reaching $220.3 billion in revenue by the end of 2022. Implementing trade deals such as this one creates opportunities for the industry to exceed market expectations. Establishing a stronger and fairer trade deal benefits every part of the U.S. economy, including manufacturers, farmers, agribusinesses, retailers, technology companies, importers, exporters and other supply chain stakeholders.”
It continued, “With markets like China, we must maintain strong and fair trade agreements that protect the interests of natural product consumers and producers. The trade deal with China is an important element in the expected continued growth of the dietary supplement industry. Today marks an important day for our industry but the Administration’s job is not done—let them know today that they must act fast and complete ‘Phase Two,’ finalizing the much-needed U.S.-China trade deal.”
