Officials at the Office of the United States Trade Representative (USTR) resisted efforts to temporarily lift tariffs on baby formula imports during the 2022 shortage, documents obtained by ProPublica show.
In emails sent in May 2022, USTR officials pushed back against attempts to remove tariffs on baby formula, citing concerns that loosening tariffs would cause "lots of questions from domestic dairy producers." They even suggested that dairy industry giants should receive "a heads-up right before any press release goes out, so that they don't feel blindsided." By the end of that month, formula out-of-stock rates had reached 74 percent nationally, sending desperate parents scrambling for formula.
The baby formula shortage began in February 2022 after Abbott Nutrition, a major U.S. formula producer, shut down its largest plant and issued several formula recalls following bacterial contamination in its products.
The shortage was made worse by tariffs as high as 17.5 percent on baby formula imports. These tariffs—combined with stringent labeling regulations that made it difficult for foreign-produced formula to even get approved in the first place—made obtaining imported formula effectively impossible during the first months of the shortage.
However, USTR officials resisted the idea that the Abbott plant shutdowns were even to blame for the shortage—and suggested that removing tariffs wouldn't help the situation. One official, Julie Callahan, wrote to a National Security Council (NSC) employee, claiming that the "situation at retail appears to be a combination of transportation/shipping and panic buying by consumers, not an issue of inadequate domestic production." She later told colleagues that she "tried to convey to NSC in very strong terms yesterday that removing tariffs from infant formula will not result in increased access to infant formula for U.S. consumers."
"We are hearing from the Speaker's office that HHS is blaming a 17 percent tariff on formula as the reason for the shortage," USTR official Allison Smith wrote on May 16, according to ProPublica. "Obviously, that's a problem."
Thankfully, the Biden administration didn't listen to USTR's advice. In May, President Joe Biden directed military planes to transport European formula to the U.S., and the following month, Congress passed legislation suspending tariffs on most baby formula imports. In August, the Department of Agriculture suspended regulations that forced parents using Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) benefits to only buy specific formula brands.
However, these changes were temporary, leaving the U.S. baby formula supply again vulnerable to a similar shortage.
"Disappointingly, policymakers failed to glean important lessons from the crisis and squandered the opportunity to liberalize an industry in dire need of free market reform." policy analyst Gabriella Beaumont-Smith wrote in 2023. "As a result, the U.S. maintains an infant formula market vulnerable to shocks and parents will pay higher prices to feed their babies."
USTR, for its own part, has strongly denied that its employees attempted to thwart efforts to remove baby formula tariffs. In a statement, a spokesperson told ProPublica that the agency "was committed to using all tools, including trade tools, to address the formula shortage and ensure American families were able to access infant formula," adding that "any implication that USTR stood in the way of addressing the crisis is completely false."
However, it's hard to buy this claim. USTR officials' pushback against removing tariffs is a textbook example of crony capitalism—one in which government officials were more concerned about shielding the U.S. dairy industry from competition than parents' ability to feed their own children.
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