Rock ‐​a‐​Bye Trade Restrictions on Baby Formula

Gabriella Beaumont-SmithOver the last few months, a  U.S. baby formula producer issued recallsbothvoluntarily and required by the Food and Drug Administration (FDA). These recalls arerocking the U.S. baby formula market leaving parents facing higher prices andbare shelves. Stores like Walgreens,CVS Health, andTarget are limiting the number of formula products per purchase because of low inventory —just last month, national out‐​of‐​stock levels reached40 percent!One reason retailers are struggling to recover stock levels is the multifarious trade restrictions that limit infant formula imports. The United States subjects infant formula totariffs up to 17.5 percent and tariff ‐​rate quotas (TRQs); for TRQs some level imported are subject to a tariff with the excess subject to a tariffand additional duties. A  few trading partners receive “special” duty rates where some infant formula imports are duty‐​free or receive lower tariffs and TRQs. Mexico is one of the few U.S. trading partners that has some duty‐​free access for infant formula, anduncoincidentally, is the top trading partner for U.S. formula imports. Though, in comparison to total imports from Mexico (worth almost $400 billion), formula imports are extremely low.Figure 1  illustrates how little baby formula the United States imports compared to its estimated domestic consumption. While it may not seem bad (and is even encouraged by many nowadays) that the U.S. does not import much baby f...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs