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Almost all of the infant formula consumed in the U.S. is domestically produced. Importing baby formula to the U.S. is allowed but uncommon.
The U.S.-Mexico-Canada Agreement established specific rules for importing baby formula from Mexico and Canada. However, many regulations around imports existed before the USMCA was adopted in 2020.
A recent Twitter post claimed the United States’ trade policy with its North American neighbors is the reason why there’s a shortage of baby formula nationwide.
"Why can’t we just import baby formula?" the May 14 tweet said. "Ever heard of the United States Canada Mexico Agreement? That bit of legislation Trump and Republicans proudly replaced NAFTA with? Remember Trump bragging about that? Remember? That. That's why."
The U.S.-Mexico-Canada Agreement, which officially replaced the North American Free Trade Agreement in July 2020, did overhaul the country’s trade policies with Canada and Mexico. But claiming that trade agreement is the sole reason the U.S. can’t import baby formula vastly oversimplifies the issue.
The U.S. can import baby formula, but in a typical year, about 98% of the infant formula consumed in the U.S. is domestically produced. Only a small amount of formula is imported from other countries, such as Mexico, Ireland, the Netherlands, Chile and Austria.
The importation of baby formula is subject to high tariffs and complex policies that aim to protect the U.S. dairy industry from competitors and ensure that formula is safe to consume.
Domestic and foreign manufacturers alike must adhere to government regulations and undergo review by the U.S. Food and Drug Administration in order to have their products approved for sale in the U.S.
The FDA requires baby formula to meet certain ingredient and nutrition requirements, and the products must follow specific labeling guidelines. For instance, the labels must be in English, except in areas where English is not the predominant language.
Once a baby formula product receives FDA approval, retailers must then wait 90 days before marketing it.
"It’s a very heavily involved regulatory process, which is why it’s difficult to import baby formula," said Gabby Beaumont-Smith, a policy analyst at the Cato Institute, a libertarian think tank.
The U.S. also requires foreign companies importing baby formula to pay tariffs of up to 17.5%. Additional duties can be placed on formula imports if they exceed a certain amount.
These tariffs, as well as the FDA regulations, existed before the USMCA was adopted. But the new trade deal did make some changes to the importation of baby formula from Canada and Mexico.
Provisions in the trade agreement limit how much baby formula Canada can export globally each year and impose charges if the exports exceed a certain amount. Currently, if Canadian businesses export more than 40,480 metric tons collectively, they would be subject to an export charge of $4.25 (Canadian dollars) per kilogram. The U.S. didn’t import any baby formula from Canada in 2021.
This limit was imposed at the insistence of U.S. authorities because there was concern prior to the new trade deal that Canada was "dumping" powdered milk products, which includes baby formula, said Andrew Novaković, a professor of agricultural economics at Cornell University.
"Dumping" is when a country or company persistently sells their product to a foreign buyer at a price considered to be at a loss, "usually for the purpose of simply gaining market share or punishing their foreign competitor," Novaković said.
Meanwhile, under the USMCA, Mexico is one of the few U.S. trading partners that can import baby formula duty-free. Only a small amount of baby formula, roughly 12,000 metric tons, was imported from Mexico last year, according to the U.S. International Trade Commission.
On May 16, the FDA announced new guidance on the importation of baby formula to help increase the availability of the product in stores across the U.S. The FDA is prioritizing manufacturers that have the largest volume of product available, can get their products onto shelves the quickest, and can demonstrate their product meets the agency’s safety and nutrition standards.
Social media posts claimed that the U.S. can’t import baby formula due to the USMCA replacing NAFTA.
Importing baby formula to the U.S. is allowed, although these imports usually only make up about 2% of all baby formula consumption in the country.
The USMCA did make some changes to how baby formula is imported to the U.S., but many other regulatory policies affect imports as well. The trade agreement is not the only barrier to the U.S. importing more formula.
We rate this claim Mostly False.
Twitter post, May 14, 2022
WhiteHouse.gov, "FACT SHEET: President Biden Announces Additional Steps to Address Infant Formula Shortage," May 12, 2022
U.S. Food and Drug Administration, "FDA Encourages Importation of Safe Infant Formula and Other Flexibilities to Further Increase Availability," May 16, 2022
U.S. Food and Drug Administration, "FDA Takes Important Steps to Improve Supply of Infant and Specialty Formula Products," May 10, 2022
U.S. Food and Drug Administration, "FDA Issues Guidance for the Labeling of Infant Formula," Sept. 16, 2016
Cornell Law School’s Legal Information Institute, "Title 21, Section 350a of the U.S. Code," accessed May 16, 2022
U.S. International Trade Commission, "Harmonized Tariff Schedule, Chapter 19," accessed May 16, 2022
Office of the United States Trade Representative, "United States–Mexico–Canada Trade Fact Sheet: Agriculture: Market Access and Dairy Outcomes of the USMC Agreement," accessed May 16, 2022
U.S. International Trade Commission, Baby formula imports from Canada and Mexico spreadsheet, accessed May 18, 2022
Cato Institute, "Rock‐a‐Bye Trade Restrictions on Baby Formula," May 10, 2022
The New York Times, "The Morning newsletter: The Baby Formula Crisis," May 13, 2022
The Atlantic, "What’s Behind America’s Shocking Baby-Formula Shortage?," May 12, 2022
Associated Press, "US allows more baby formula imports to fight shortage," May 17, 2022
Fortune, "Why the U.S. can’t just increase imports to solve the baby formula shortage," May 17, 2022
CBC News, "Trade deal concessions threaten jobs at Kingston, Ont., baby formula plant," Oct. 12, 2018
American Shipper, "How US trade policy is making the baby formula shortage worse," May 17, 2022
Vox, "USMCA, Trump’s new NAFTA deal, explained in 600 words," July 1, 2020
Phone interview, Gabriella Beaumont-Smith, policy analyst, Cato Institute, May 17, 2022
Email interview, Andrew Novaković, professor of agricultural economics, Cornell University, May 19, 2022
Email interview, Tamara Kay, professor of global affairs and sociology, University of Notre Dame, May 17, 2022
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