Trump raised import duties on Indian goods from 25% to 50% in August last year. As part of the deal, India will cease buying oil from Russia as purchasing the oil provides revenue to fund Russia’s ongoing war with Ukraine.
“We welcome the announcement of a pending trade deal between the United States and India that reportedly would reduce the overall tariff for goods imported from India from 50% to 18%,” said Robert Marriott, vice president of regulatory and government affairs at the American Herbal Products Association. “AHPA has been working closely with U.S. federal agencies and the Embassy of India on reducing or eliminating tariffs on unavailable natural resources, such as psyllium husk and Boswellia, and we await the final agreement’s details.”
Jeff Ventura, vice president of communications at The Council for Responsible Nutrition, said the organization had multiple conversations with the U.S. Department of Commerce and the U.S. Trade Representative in recent months about the tariffs, though could not elaborate on the sensitive nature of those conversations, he said.
“CRN welcomes the Administration’s announcement of a new trade deal with India, including the reduction of tariffs on goods from that country, which highlights the value of sustained engagement on evolving trade issues,” Ventura added. “CRN and its members express our gratitude to the Trump Administration for being responsive to our concerns. Numerous supplement ingredients imported from India that contribute to better health cannot be harvested here in the U.S. or not in the quantities to meet consumer demand. This is a clear example of how trade associations help navigate uncertainty and advocate for practical solutions that benefit consumers and industry alike.”
Anand Swaroop, PhD, CEO of supplement manufacturer Cepham, predicted last year that a tariff resolution would be unlikely before Q2 2026.
“Here we are in early February with a framework deal,” he said. “I also predicted permanent 15% to 20% duties, and 18% lands squarely in that range.”
Dr. Swaroop noted that he has concerns over the uncertainty hanging over other recent agreements such as the recent EU-US trade deal suspension and South Korea, where President Trump in January announced an increase in U.S. tariffs on South Korean imports—including automobiles, lumber and pharmaceuticals—from 15% to 25%.
“India’s deal doesn’t exist in a vacuum,” he said. “My core message from [last year] remains: These tariffs severed connections between American consumers and centuries of botanical wisdom.
“An 18% tariff doesn’t fully repair that, but it makes restoration possible. The companies that maintained quality through chaos have earned something money can’t buy. The deal reportedly includes India committing to zero tariffs on U.S. agricultural imports. That reciprocity matters for the broader trade relationship and for organizations like the India Chamber of Business and Commerce where I serve. This could be a foundation for something more durable than a temporary reprieve.”
Cost relief for customers?
Global supplement manufacturer and supplier Sabinsa, which has seven manufacturing facilities near Indian cities Bangalore and Hyderabad, said the reduction to 18% restores much of its competitive position in the U.S. market.
“This tariff reduction is transformative for Sabinsa and the broader nutraceutical ingredient industry,” said Shaheen Majeed, the company’s global CEO and managing director. “When the U.S. imposed the original 25% reciprocal tariff in August 2025, compounded by an additional 25% punitive tariff for Russian oil purchases—bringing the total to 50%—it fundamentally altered the economics of our India-manufactured ingredients.”
To put this in perspective, Majeed said the company’s India-produced melatonin was previously priced competitively, less expensive than China-origin material. Once those tariffs hit, the economics flipped.
“We didn’t change our manufacturing costs, yields or efficiencies—nothing changed on the science or supply side,” he added. “The only change was the tariff burden, and suddenly a product that had been a cost-effective solution became more expensive than the Chinese alternative. This wasn’t a capability issue; it was purely policy-driven.”
While the tariff reduction is ‘effective immediately,’ the supply chain pivot is not instantaneous, said Suresh Lakshmikanthan, PhD, chief business officer at global animal health company Natural Remedies.
“Most supplement companies are currently sitting on high-cost inventory imported under the 2025 tariff regime,” he said. “They must sell through this stock before they can capitalize on the new 18% rate.”
Re-establishing contracts with Indian suppliers that were paused or scaled back will take three to six months, especially for mid-sized firms, Dr. Lakshmikanthan said.
“However, companies with existing in-transit goods will see an immediate margin improvement on those arrivals,” he added.
For some supplement companies, their inventory was purchased and imported under the 50% tariff structure, which means that inventory carries the higher cost. Majeed said it would be financially irresponsible for companies to sell that inventory at a loss to offer immediate price reductions.
“As new shipments arrive under the 18% tariff rate, those savings can flow through,” he said. “Applying a last-in, first-out strategy would be disastrous and not advisable under these conditions.”
He added that many of Sabinsa’s customers have revised their formulations, pricing strategies and market positioning based on the higher tariffs and that making changes requires strategic planning, not knee-jerk reactions.
“I do expect competitive pressure to push some price adjustments as the new economics take effect,” Majeed said. “What I can say with confidence is that the improved cost structure will benefit the entire value chain, from Sabinsa to our customers to end consumers. Whether that manifests as lower retail prices, improved margins that allow for more innovation and clinical research, or investment in better quality and sustainability practices, they will vary by company and market segment.”
Dr. Swaroop noted retail prices will change but closer to the end of Q2 2026 as the supplement industry works through higher-cost inventory purchased during the 50% and 25% tariff periods enacted by the Trump administration last year. Suppliers also absorbed significant losses that need recovery.
“Competitive pressure will drive adjustments faster than pure inventory turnover would suggest,” Swaroop said. “I expect 5% to 10% reductions on new contracts by late Q2, with further normalization through the back half of 2026. Customers should be cautious of anyone offering dramatic overnight cuts. That’s either loss-leader positioning or a quality compromise.”
Dr. Lakshmikanthan noted that most companies have been “absorbing” the 2025 tariff costs to avoid alienating customers, resulting in 40% to 60% margin declines. The 18% rate will first be used to stabilize the supply chain health while carefully and steadily lowering retail prices.
“If the 18% rate holds steady, consumers might see ‘promotional’ discounts or a pause in planned 2026 price hikes by Q3 or Q4, while they may see a steady decline in price in Q2,” he said.
Pivoting post rate change?
There is a common assumption that companies can easily prepare for tariffs, or pivot quickly, when tariffs are reduced. The reality may be more complex when companies deal with nature-derived ingredients.
“Companies that maintain supplier relationships can pivot within 60 to 90 days,” Swaroop said. “That’s the time needed to renegotiate contracts, adjust pricing and rebuild inventory. Those who abandoned Indian sourcing entirely face 6-to-12 months to re-qualify suppliers and rebuild trust.”
Swaroop added that Cepham stayed the course at the 50% tariff, positioning the company to respond quickly.
“The real challenge is forecasting,” he said. “After this volatility, procurement teams are cautious about large forward contracts. We’ll likely see smaller, more frequent orders until confidence in the deal’s durability is established.”
Some adjustments can happen relatively quickly, such as pricing adjustments, restoring promotional activities for India-sourced products and recalibrating supply chain logistics, but other changes take longer, according to Majeed.
“If a company established new supplier relationships outside India, relocated manufacturing capacity, or committed to long-term contracts with alternative sources, unwinding those decisions requires careful consideration,” he noted. “There are contracts, commitments and relationships involved. Additionally, the supplement industry operates on formulation stability and regulatory compliance. You can’t just swap ingredient sources without proper testing, documentation and sometimes regulatory filings.”
As for farmers producing supplement-essential crops, accelerating a harvest cycle or an extraction process is not necessarily possible when a trade policy changes.
“When farmers in India began transitioning from growing supplement-essential crops such as turmeric, black pepper, amla and ashwagandha to other crops less affected by tariffs, they made those decisions based on planting cycles that span months or even years,” Majeed said. “Can this tariff reduction help mend those relationships? Absolutely, but it won’t be immediate. We need stability and predictability to give farmers confidence that it’s worth returning to these crops.”
