The American Herbal Products Association (AHPA) urged the U.S. Trade Representative (USTR) to remove herbal product ingredients from a list of Chinese goods that would be subject to a 25 percent ad valorem duty under a recent USTR proposal to increase tariffs on an estimated $300 billion worth of Chinese imports.

On May 17, 2019, USTR published a Federal Register notice to propose an additional ad valorem duty of 25 percent on a list of certain products from China classified in 3,805 full or partial tariff subheadings of the Harmonized Tariff Schedule of the United States (HTSUS), including many herbs and ingredients used in dietary supplements.

In comments submitted to USTR, AHPA President Michael McGuffin requested that ingredients used in dietary supplements and general food products be removed from the proposed list of Chinese imports that would be subject to additional tariffs because supplements and food play important roles in the health of U.S. consumers. AHPA's comments also document how higher taxes on Chinese herbal ingredients would cause disproportionate economic harm to U.S. interests, including small or medium-sized businesses and consumers.

McGuffin notes that this request appears consistent with USTR’s justified decision, as stated in the May 17 Notice, to exclude “pharmaceuticals, certain pharmaceutical inputs, [and] select medical goods” from the scope of the proposed action."

"In light of dietary supplements’ important role in promoting the health of the U.S. population, USTR should exclude ingredients used in these products from any proposed tariff increases," McGuffin said. "Any increase in costs or reduction in availability of dietary supplements caused by a tariff increase would negatively impact many million American consumers."

AHPA's comments to USTR also show how:

• The proposed tariff increase on herbal ingredients will harm U.S. businesses and American consumers;
• U.S. companies that manufacture or market dietary supplement make significant contributions to the U.S. economy with jobs and taxes;
• The vast majority of U.S. dietary supplement companies are small businesses;
• Estimates of the costs that individual U.S. manufacturers and marketers of dietary supplements and other herbal products will bear from the proposed 25 percent ad valorem duty can be assumed to be extensive, ranging as high as millions of dollars annually for some individual companies;
• U.S. manufacturers and marketers of products impacted by these proposed additional ad valorem duties will be faced with the need to either increase prices and thus risk sales losses, absorb additional costs by reducing profit margins, or discontinue products; each of these options risks economic harm to these companies and job losses to their employees;
• Tariff increases on herbal ingredients will cause extensive disruptions in ingredient supply chains, which will require substantial resources and unacceptable time lapses to address;
• A significant portion of the American population use dietary supplements and other herbal products to promote their health, and these consumers will encounter increased prices or reduced selection, or both, if USTR goes forward with this action as proposed;
• Consideration should be given to excluding all ingredients used in dietary supplements and other foods in recognition of the important role these products play in promoting Americans’ health;
• Harming U.S. businesses and American consumers is inconsistent with USTR’s own criteria for selecting appropriate Chinese exports for imposition of duties in response to the Section 301 Investigation.