American parents learned a hard lesson about the cost of protectionism earlier this year when huge tariffs were imposed on imported baby formula contributed Leading to a nationwide shortage that lasted for months.
Now, Congress is being persuaded to make the same mistake again.
Duties on imported formula were temporarily lifted as part of the Comprehensive Action Against Infant Formula Shortages Act passed by Congress in July. But unless Congress takes further action before the end of the year, Those 25% tariffs will return On the first day of 2023 – US dairy industry lobbyists are keen to make sure that happens.
“Given the temporary production shortages plaguing the U.S.
Fewer Families Needing Formula Earlier This Year, We Urge Congress
Ensure that unique unilateral tariff benefits … end as scheduled by the end of the year,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. written in a letter It was presented to Congress and senior Biden administration officials last month. “We respectfully ask that you oppose any effort to extend these preferential tariff benefits beyond the end of this year.”
Let’s call it what it is. The dairy industry is asking Congress to tax infant formula at a time when many American parents are still struggling to find enough supplies. This could improve the bottom line of domestic formula makers by eliminating competition – but at the cost of higher costs for parents to feed their babies and again exacerbating the risk of supply shortages.
Despite the dairy industry’s dissent in its letter, the crisis is not entirely over. As of last month, about one third U.S. households are reporting difficulty finding adequate supplies of infant formula, according to a weekly survey conducted by the Census Bureau as part of its attempt to track supply chain issues related to the COVID-19 pandemic.In early November, Agriculture Department officials Tell politician Putting formula on the shelves “clearly remains problematic”.
Tariffs on baby formula didn’t create that confusion, but they certainly made it harder to fix the problem.
Parents had to scramble to find formula and stores had to ration limited supplies at the Michigan factory, which makes about a quarter of all U.S. infant formula, was forced to shut down in February amid suspected contamination.In a freer market, infant formula Manufactured elsewhere in the world– Most of the rest of the world’s formula milk supply is Made in Europe– could have been redirected to the US to meet unmet demand and cushion supply shocks.But huge tariffs and Excessive Food and Drug Administration (FDA) regulationsoften have nothing to do with security Or nutrition, keeping foreign-made formulas off American shelves.
The whole situation illustrates the misunderstanding of the value of trade by nationalist conservatives. Protecting domestic suppliers with tariffs and other policies does not make America stronger or our supply chains more resilient. It creates dangerous dependencies and limits the ability of markets to respond to crises.
As markets fail to react, we instead see a futile spectacle of a Biden administration air formula Entering the United States from Europe.other steps, such as congress Cancellation of tariffs and the U.S. Food and Drug Administration Relaxation of regulatory regime, should happen sooner – but at least points in a positive direction. Federal officials seem, learned a valuable lesson And make sure that a crisis like this doesn’t happen again.
“This crisis is not just bad luck, but a perfect storm of supply chain disruptions and chronically bad policies, made worse by a slow and tedious response from policymakers,” Write Gabriella Beaumont-Smith, trade policy analyst at the Cato Institute. “Hopefully there won’t be another crisis persuade Government and Congress permanently reform these egregious obstacles that do more harm than good. “
The key to most protectionist policies is to ensure that costs are spread and benefits are concentrated. The extra costs from tariffs translate into fewer choices and higher prices for consumers — but most people are unlikely to notice these things. At the same time, not having to compete with some of the largest formula makers in the world is a huge boon for the domestic dairy industry. So the industry has an incentive to lobby for this protectionism, and the average consumer has little idea what’s going on until a shortage arrives.
this is a basic principle public choice theoryHowever, it is rare to see such clear examples of this theory translated into reality. Congress should reject yet another attempt by the dairy industry to cripple the U.S. infant formula supply chain.
