Johnston highlighted how rapidly changing tariff rates make planning nearly impossible for businesses. As a manufacturer exporting to over 70 countries, Arjuna Natural faces significant challenges since botanicals largely lack exemptions.
He emphasized the importance of transparency with customers while noting limited mitigation options and warned that high tariffs may cause long-term supply chain shifts away from India toward China. He also advocated that effective manufacturing policy should allow tariff-free components for items that cannot be domestically produced rather than offering post-manufacturing rebates that only large companies can access.
“We all experienced the pandemic, and there was a lot of supply chain shortages, and that was very impactful,” he said. “I’ve seen commodities where the pricing is shot way up or way down due to usually environmental factors, things like that, but I’ve never seen anything like this happen so quickly and so dramatically.”
While the dietary supplement industry has historically remained resilient, Johnston expressed concern about potential cost-cutting measures, including shifts toward cheaper commodities and increased adulteration. He emphasized that branded ingredients may offer better value through concentrated dosages, but manufacturers face pressure to reformulate and maintain competitive pricing.
Quality control and rigorous testing are now more critical than ever to combat anticipated adulteration risks resulting from tariff-driven cost increases, Johnston noted.
“When you take an ingredient that costs, say, $100 per kilogram exported out of India, and now it’s a 50% tariff on that, so an extra $50, there’s going to be a lot of manufacturers or suppliers who are going to look for ways to make that cost more affordable and the easiest way to do that is to adulterate products,” he said.
Johnston added that he has been in touch with a few analytical labs recently, and they are also concerned about adulteration.
“It’s definitely going to be a thing that’s going to happen, and we’re just going to have to be vigilant and make sure that we’re checking everything,” he said.
Challenges aside, Arjuna is focused on its recent innovations, including a root-based beverage ingredient for relaxation and an okra-derived product for energy. Johnston discussed how increased vertical integration and customer feedback have driven substantial innovation from its U.S. office, making the past couple of years particularly exciting despite ongoing economic uncertainty.
To hear more on how the unprecedented price strains could lead to adulteration and threaten quality, listen to the NutraCast above or on your preferred podcast platform.
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