Following an October 2024 petition from a U.S. manufacturer, the United States government initiated an antidumping (AD) and countervailing duty (CVD) investigation on Hard Empty Capsules (HEC) from Brazil, China, India and Vietnam. The investigation centered on whether these imports are sold at less than fair value (dumped) or subsidized.
The petition was filed by Lonza Greenwood LLC, which produces Lonza Capsugel capsules in Greenwood, South Carolina.
After a year-plus investigation, the U.S. Department of Commerce (DOC) and U.S. International Trade Commission (ITC) issued a final affirmative determination last month that found that HEC imports from these nations were sold in the United States at less than fair market value. The findings stated that imports from Brazil, China, India and Vietnam are harming the U.S. capsule industry by undercutting domestic producers, with the investigation revealing significant dumping margins.
According to the DOC, the final dumping rates are:
- Brazil: 77.63%
- China: 18.71%
- India: Dumping rates ranged from 10.66% to 26.69% to with “all others” listed at 18.68%
- Vietnam: 47.12%
The DOC generally assigns antidumping duties based on the highest alleged dumping rates to foreign producers and exporters that fail to cooperate during its investigations. These adverse inferences are applied when exporters do not act to the best of their ability to comply with investigations.
The investigation also determined that foreign producers of HECs received unfair government subsidies, which led to an artificial cost advantage. The DOC found the following government subsidization rates for HEC producers:
- Brazil: 10.67%
- China: 6.90%
- India: 7.06%
- Vietnam: 2.45%
How this case could impact cost structure
Meeta Kratz, VP/GM Americas Region at Lonza Capsules and Health Ingredients (CHI), told NutraIngredients that these findings could reshape the U.S. market by normalizing the pricing of imported HECs.
“The ITC’s final affirmative determination confirms that imported HECs from the subject countries were sold at less than fair market value, and earlier findings across multiple countries identified dumping and subsidization that distorted market pricing,” she said. “Importers will need to look at total landed costs, as well as service levels from imported HECs vs those produced locally, thus causing buyers to reassess sourcing strategies, diversify suppliers or consider returning to domestic sourcing.”
Kratz suggested that companies be aware that changes in HEC suppliers may carry regulatory, quality and supply implications, particularly for pharmaceutical products.
“Overall, the investigation signals a shift toward a more balanced competitive environment, with pricing, supply chain resilience and long-term planning becoming more critical considerations,” she said.
Restoring fair pricing to support domestic growth
Kratz said she anticipates that the investigations into HECs will normalize the pricing and landed cost of certain imported products found to be sold at less than fair value or unfairly subsidized.
“For the domestic manufacturers of HECs, fair market pricing allows the producers to operate in a fair market, which allows for healthy local pricing and strategic site-level investment,” she explained. “R&D efforts and innovation aligned with this strategy for the domestic market ensure best value to our customers. It may also have the indirect effect of having foreign-owned suppliers investing in domestic manufacturing, leading to healthy fair market competition locally.”
With HECs used for both human and animal consumption across a wide range of HEC options, Kratz noted that it is important to keep in mind that the scope of the case is broad.
“Against a backdrop of evolving tariff policies, trade enforcement actions and continued global manufacturing volatility, many nutraceutical and pharmaceutical companies are reassessing how to protect themselves from future supply chain disruption,” she said. “These pressures introduce uncertainty for organizations that rely on predictable pricing, stable lead times and uninterrupted capsule supply. This is prompting a greater focus on local and secure manufacturing options and partnerships with suppliers that maintain proven North American production capacity, an area where Lonza Capsugel is well established.”
Safeguarding supply chains
This situation creates a high stakes atmosphere for nutraceutical and pharmaceutical manufacturers who rely on a steady and affordable supply of HECs, Frank Romanski, PhD, vice president of strategic growth and revenue management at Lonza CHI said.
Romanski recommends companies plan for different outcomes, such as supply chain reassessment.
“Companies can help to safeguard supply chains by understanding exactly where their products come from and how vulnerable those sources might be,” he said. “Keeping an open line of communication with suppliers to understand how tariffs or trade rulings could affect pricing or delivery is critical.”
By diversifying suppliers—geographically or domestically—companies can help avoid sudden disruptions, Romanski said.
“While tariffs in the US are currently highly dynamic, the final ruling of the ITC stands for five years, with many cases on the books extending many years past,” he added.
Mitigating cost volatility and supply risk
To prepare for trade-related changes, Romanski told NI that brands should start or continue to closely monitor trade developments, including tariff announcements, regulatory changes and final determinations on imports. This allows companies to fully understand how cost, supply availability and delivery timelines will be impacted.
“Assessing the stability and risk profile of existing suppliers is crucial, particularly for those operating in regions subject to these trade investigations,” he said.
“Brands should also consider building flexibility into production schedules and inventory planning to accommodate potential delays or cost fluctuations. Open communication with suppliers ensures that brands are aware of emerging risks and can adjust strategies quickly. Ultimately, brands that combine vigilance, diversification and flexible planning will be strongly positioned to navigate market disruptions while maintaining operational continuity and meeting customer expectations.”
AD and CVD deposit rates locked in
According to Lonza, cash deposits for the AD and CVD duties have been collected at ports of entry since April 1, 2025. The updated rates represent the amounts that will continue to be collected at the point of entry over the next five years, pending review. If importers lower their prices to try to absorb or offset the duties, those adjustments can be contested during the annual review period in January 2027.
