Senate Passes Formula Act; House Lead Sponsor Says Relief Will Be Immediate

A bill that will eliminate tariffs on imported baby formula through the end of the year passed the Senate July 21 after passing the House last week, and the tariffs will be lifted the same day the president signs it into law.

"I think it can make a difference [in prices] right away," Rep. Suzan DelBene, D-Wash., told International Trade Today in a phone interview. DelBene, who led the push to get it passed in the House, is also the head of the pro-trade New Democrats caucus. DelBene said tariffs on some imports are 25%, and she hopes by removing tariffs, there will be more affordable formula available. For new parents, "The last thing you need is to be going from grocery store to grocery store, looking for supply."

She said the formula shortage has been particularly acute in her state, and as she and her staff talked about what they could do to address it, they thought of suspending tariffs. She said by making foreign formula more cost competitive, she also expects imports to rise during the tariff suspension.

The Michigan formula plant whose closure led to the shortage did reopen, but then shut down again because of flooding, and has reopened again.

Sen. Mike Lee, R-Utah, led the push in the Senate, which passed the House bill by unanimous consent. Lee said on the floor before the voice vote, "By suspending the tariff on formula imports, we are providing cheaper access to formulas to individual consumers and retailers alike." Lee said desperate parents have paid exorbitant markups during the shortage, and some even resorted to dangerous homemade formula.

"After months of work and bipartisan collaboration with my colleagues in the House and the Senate, we can finally provide relief to hungry babies," he said.

U.S. Trade Representative Katherine Tai put out a statement after the bill passed the Senate: "Today’s vote sends a strong, bipartisan message that the United States will use all the tools at our disposal to address the infant formula shortage, strengthen the resilience of the formula supply chain, and lower costs for American families.

“This legislation will enhance the actions President Biden has taken to date, including seventeen Operation Fly Formula missions to accelerate the importation of infant formula and get it on shelves as quickly as possible. By early next week, this operation will have transported more than 61 million 8-ounce bottle equivalents to the United States. Additionally, the President is using the Defense Production Act and coordinating partnerships between the federal government and businesses to increase domestic supply.

“We are also improving the resiliency of our domestic infant formula supply chain to prevent future disruptions. On Monday, the U.S. Department of Agriculture announced a comprehensive plan to ensure that families in the Special Supplemental Nutrition Program for Women, Infants, and Children can access infant formula during emergencies. Our Administration will also work with manufacturers to diversify production and meet the everyday needs of American families."

DelBene and Lee, too, said the tariff waiver can't be the end of congressional action.

"I think when we talk about what we’ve seen throughout the pandemic, having a resilient and redundant supply chain is really important," she said, and that policymakers should think about long-term solutions, too.

Lee said on the Senate floor that the bill was aiming to "alleviate a crisis largely of the federal government's own creation." He said that tariffs and regulations have prevented safe foreign formulas from entering the U.S., and that the lowest tariff on formula was 17.5%.

"While passing my bill will provide immediate relief, our work is far from complete," he said. He said WIC program benefits recipients should be allowed to buy any formula, and that Congress should make "meaningful reforms" to how the FDA regulates the formula industry. "While this is an important first step, it is certainly not the last," he said.

DelBene said that if the shortage is still not resolved at the end of the year, "I'm sure we could do something pretty quickly to extend it if we needed to."