Diversification and resilience: How supplement companies weathered tariffs in 2025

“We are seeing a shift in global focus,” said Shaheen Majeed, global CEO and managing director of global health science company Sabinsa, which manufactures and supplies branded supplement ingredients. “Several companies in our sector are redirecting their commercial efforts to regions like Southeast Asia, where tariff exposure is lower and market opportunities are expanding. It’s not because they want to deprioritize the U.S.—it’s because the economics are forcing diversification.”

Anand Swaroop, PhD, CEO of supplement manufacturer Cepham, said he sent far more representatives from his company to last year’s VitaFoods Asia trade show than in previous years, acknowledging the importance of Asia’s consumers for the future of the supplement industry.

“Southeast Asia is explosive as of today, and I think we refer to it as a ‘rest of the world’ market that will be of equal or slightly more valuable than the U.S. market by 2030,” he said.

According to market research firm Statistica, the supplement market in Southeast Asia will surpass $200 billion in the near future. The U.S. supplement industry is expected to reach more than $131 billion by 2033.

The push toward other markets is a result of tariffs that can hinder U.S. market competitiveness, as the supplement sector in the United States has experienced more shockwaves than any other region due to the taxes. Both Swaroop and Majeed acknowledged that tariffs on India’s botanical imports play a significant role because of the sheer volume of goods that move from India to the United States each week.

In 2025, the U.S. levied up to 50% tariffs on imports from India, many of which impacted members of the American Herbal Products Association (AHPA).

“We’ve been focusing on India until very recently because its U.S. trade delegation’s been in active negotiations with the U.S. government,” said Robert Marriott, vice president of regulatory and government affairs at AHPA. “There’s been no other deals signed with them in the process, and because it’s one of the places where the strongest narrative is available for nationally unavailable resources [in the United States]. What I can share is that we’ve now collected an additional tranche of data from our members regarding other countries where there are issues with naturally unavailable resources, and we’re making decisions now about which other trade delegations we may engage with. Based on initial analysis, these may include China, of course, the European Union and South Africa.”

The U.S. benefits from specialized natural ingredients, and India is a major supplier of botanicals, extracts and nutraceutical actives. When tariff structures disproportionately target a particular trade corridor, such as India to the United States, the ripple effect is immediate. Ingredient costs distort, customer procurement patterns shift and long-standing value propositions are altered overnight, Majeed said.

One example of a product which has been impacted is Sabinsa’s India-produced melatonin. Before the recent tariff’s began, the company’s melatonin was priced competitively and was even less expensive than China-origin material.

“Once the tariff structure escalated, the economics flipped entirely,” Majeed said. “We did not change our manufacturing costs, our yields or our efficiencies. Nothing changed on the science or supply side. The only change was the tariff burden imposed on Indian-origin goods, and suddenly a product that had been a cost-effective solution for U.S. customers became more expensive than the Chinese alternative. This wasn’t a capability issue but a policy-driven issue.”

Mushroom ingredient supplier Nammex, whose headquarters are in Canada, spent years shipping its materials to the United States for warehousing and order fulfillment. Nammex sources the mushroom raw materials for its extracts primarily from organically cultivated farms in China.

“Now we are looking at moving inventory and hence business out of the United States in order to be tariff free for international customers,” said Skye Chilton, CEO of Nammex. “Companies are less competitive internationally if they are importing into the United States, paying tariffs and then exporting the products.”

Can customers be cushioned from the tariff burden?

There are several reasons why supplement companies are exploring other markets, and long-term tariff impact on customers is a primary one.

Wilson Lau, president of Nuherbs, which provides wholesale Chinese herbs, said uncertainty in the supply chain has compressed customer margins, affecting clients’ ability to pass on the increase in cost as quickly as the tariffs change.

Like many suppliers, Nuherbs has been forced to pass on some of the new import taxes cost to its customers, while internalizing many of the expenses and avoiding a full pass-through of the tariffs.

“As ingredient suppliers, specifically botanicals, our margins aren’t high,” Lau said. “We held off at first because it changed seemingly every day, one week 145%, then 30%, then 500% was threatened. We waited until things stabilized somewhat before raising our prices to provide stability and certainty.”

He added that several of the announced higher tariffs on China were mostly public talking points, part of negotiating tactics.

“Although there were certain days—maybe even weeks—where the tariffs were higher; for the most part, the tariffs on China have been consistent this year,” Lau said. “But they are higher than they were.”

India, however, is an example of how volatile the environment became. The tariff trajectory climbed from a universal 10% baseline introduced April 2025 to a 25% India-specific tariff effective in August, followed by an increase to 50% tied to broader geopolitical penalties around India’s energy and oil relations.

“Through all of this, we kept our core product pricing stable and used the separate tariff line item to reflect only the 40% we passed through, which was a deliberate decision to cushion the impact on our partners,” Majeed said. “While there were discussions about possible rollbacks, India has not seen any tariff relief to date. Because we kept these costs separate from our base pricing—and because we passed on less than the full government burden—we avoided constant price fluctuations throughout the year. Sabinsa absorbed operational burdens where we could and maintained consistent per-kilogram pricing.”

All forms of recent tariffs on imports from India have affected Sabinsa’s business across the United States, from nutraceuticals to cosmeceuticals to the pet care ingredient segment. The impact also extends to contract manufacturing, a secondary business for Sabinsa.

“We could see tariffs on imports from other countries affecting pricing, for example, on capsules or bottles manufactured in China or Vietnam,” Majeed said. “Materials sourced from China varied these past few months; some vendors had goods stateside, but that won’t be the case as the months proceed. Similarly, component suppliers (capsules, bottles, lids, etc.) all have taken a longer-term approach and have implemented new pricing from the start of the month, with no price rollbacks.”

Nammex, like most companies, said it cannot shoulder the additional import taxes and their ripple effects. Chilton said the company held off as long as possible but had to pass some additional costs on to customers.

Tariffs are not new to the supplement industry. During the Biden and first Trump administration, tariffs totaled approximately 25% for some Chinese ingredients. Jim Emme, CEO of the natural products manufacturer NOW Health Group, noted that United States Trade Representative officials have made it clear that the supplement industry has operated with these tariffs for nearly six years and not to expect any relief from those tariffs.

“We have not yet passed many tariff costs on to our customers,” he said. “We had pre-purchased significant quantities of many tariff-sensitive materials, and these inventories have shielded our customers from the tariff-affected price changes. We are currently running out of many non-tariff inventory items, so we notified our customers several weeks ago that we would be increasing some prices to offset the tariff- affected inventory items. We are not doing an ‘across the board’ increase on all of our finished good items, just those that have been impacted by the tariff-associated cost increases.”

How have customers responded? Some are reshaping product formulas, what Majeed refers to as ‘skimpflation’ in the supplement aisle. Consumers might find turmeric products with 20% curcuminoids could outsell the once-patented 95% versions where the health benefits reside. Consumer price sensitivity is rising, and brands are reformulating accordingly. They are also curtailing R&D, sources told NutraIngredients.

According to AHPA’s Marriott, some companies are moving manufacturing outside of the United States, because it is cheaper to bring in the finished product than it is to bring in something unfinished and process it here.

Can companies plan for tariffs?

Supplement companies were not completely caught off guard by tariffs given that President Trump announced during his last run for office that he would levy these new taxes. Companies worked to prepare themselves for the impact.

“Based on comments from the White House, we used a country-of-origin approach to forecasting, while considering demand quantities and lead times,” Emme said. “We pre-purchased from the countries that the White House had indicated there would be tariffs or trade issues. It wasn’t a perfect system, but it had helped to weather the storm. We funded most of these purchases from our cash reserves in order to keep our costs down.”

Nuherbs attributed its weathering of tariffs to longstanding relationships with its suppliers in China, who extended their supplier payment terms, as a way of buffering the effect of tariffs.

“Banks tend not to lend or finance during uncertain times like this,” Lau said. “And if they did, the interest rate would have to be passed onto the customers, who may not agree to an increase of cost by that percentage. That’s a hidden extra cost of these tariffs that isn’t talked about very much, but for a lot of goods, that adds to the increases consumers will ultimately pay.”

Nammex could prepare only up to a certain point but said it did not have the capacity, financing or warehousing to pull six to 12 months of inventory forward like Walmart or Target could.

“During the period where tariffs kept changing, we had to time our orders to avoid the highest import taxes when we could,” Chilton said. “It was stressful, because it takes time for material to be shipped and there was always the question of what percentage the tariffs would be when the material finally arrived in the U.S.”

Sabinsa’s Majeed added that there is a common assumption that companies can easily ‘prepare’ for tariffs and that the reality is more complex because nature-derived ingredients cannot operate on a tariff-friendly timetable.

“You cannot accelerate a harvest cycle or extraction process simply because a policy may or may not change,” he said. “That’s why, even though we anticipated some level of tariff activity, we could not forecast the magnitude or the timing with certainty.”

Cepham’s Swaroop said that Indian farmers are now transitioning from growing essential crops for the supplement industry to other items not affected by tariffs. He noted that the real impact will appear in the middle of Q1 and Q2 2026.

However, the industry is not completely without precedent. The COVID-19 pandemic provided valuable lessons in preparing for economic uncertainty. During the pandemic, long lead times showed businesses like NOW how fragile supply chains can be during times of disruption and underscored the importance of taking a proactive approach rather than waiting to respond to tariffs.

“What we found with COVID with the supply chain situation was that we had to order materials from overseas with 30 days notice, we would have to order it 60 days, then 90 days, then on into four and six months ahead,” said Cal Bewicke, CEO of ingredient supplier Ethical Naturals. “We were just having meetings at our company every week and talking to our customs brokers and shipping agents in foreign countries to find out when things would be available. We were also talking to our customers and getting projections from them.”

During the pandemic and the era of recent tariffs, suppliers often hold large quantities of raw materials, manufacturing larger batches for companies like Ethical Naturals.

Companies also heavily trimmed operating costs to generate savings and shield customers from price increases in that period. Businesses expanded carrier relationships, secured alternative shipping routes, increased safety-stock on key materials when seasonally feasible, enhanced real-time communication and improved internal forecasting to model multiple disruption scenarios.

Cepham’s Swaroop noted that the pandemic differed from the current tariff predicament. While logistics were constraints during the pandemic, supplement manufacturing itself did not disrupt manufacturing, as raw materials remained available even if goods could not easily be transported.

“The main lessons that play in our minds from the COVID-19 pandemic center on risk, resilience and supply chain continuity,” Majeed said. “Those lessons absolutely informed how we approached the tariff environment under Trump 2.0. During COVID, we learned the hard way that disruption doesn’t always come with warning signs, and that speed, transparency and diversified contingency planning are not optional. They are survival tools.”