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<h4>By Sean Dhaliwal, Ingredients Online</h4>
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The global trade landscape is experiencing significant shifts as US-China trade negotiations show tentative progress with some easing of restrictions, while new 25% tariffs on Japanese and Korean imports are planned. Major policy changes include the repeal of the de minimis exemption for imports under $800 (effective July 2027) and new antidumping investigations targeting Chinese lysine and erythritol. Companies are responding by accelerating shipments ahead of August's tariff deadline expiration and increasingly relocating manufacturing operations from China to third countries like Vietnam, Thailand, and India, or directly to the United States. This manufacturing migration is driven by the need to avoid tariff exposure and build supply chain resilience, with success depending on securing strategic resources and evaluating key factors, including labor costs, energy availability, raw material access, and government incentives that vary significantly by region and state.
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<h2>1. Tariff &amp; Trade Policy Developments&nbsp;</h2>
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<h3>US-China Trade Talks Progressing Post-Geneva&nbsp;</h3>
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Following the recent Geneva meeting, trade negotiations between the U.S. and China have shown tentative signs of progress. Media reports indicate that the U.S. is easing certain restrictions on high-tech instruments, while China has agreed to increase exports of critical rare earth <a href="https://www.ingredientsonline.com/products/dietary-supplements/minerals/">minerals</a>. While these developments are promising, the general tariff structure remains unchanged from the post-Geneva joint announcement in May. Most Chinese-origin goods entering the U.S. are still subject to tariffs ranging from 20% to 55%.&nbsp;
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<h3>New U.S. Tariffs on Japanese and Korean Imports&nbsp;</h3>
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Recent policy announcements suggest that the U.S. plans to implement a 25% tariff on a broad range of Japanese and South Korean goods. This move is expected to impact several ingredient categories, particularly <a href="https://www.ingredientsonline.com/products/dietary-supplements/amino-acids/">amino acids</a> and <a href="https://www.ingredientsonline.com/products/dietary-supplements/">dietary supplements</a> commonly sourced from these countries. As a result, the pricing gap between Chinese and non-Chinese products may narrow, potentially shifting sourcing strategies for buyers in the affected categories.&nbsp;
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<h3>De Minimis Exemption Repealed Under New U.S. Law&nbsp;</h3>
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As part of the recently enacted <a href="https://en.wikipedia.org/wiki/Reconciliation_(United_States_Congress)">Budget Reconciliation Act</a>—commonly known as the “One Big Beautiful Bill”—the U.S. government has officially repealed the de minimis exemption for low-value imports. Effective July 1, 2027, shipments valued at $800 or less will no longer enter the country duty-free, regardless of origin. This sweeping change will significantly impact businesses that rely on small-parcel shipments, particularly those operating with lean inventory models or direct-to-buyer fulfillment strategies. In addition, new civil penalties for improper de minimis use will take effect as early as August 3, 2025, with fines ranging from $5,000 to $10,000 per violation. Companies are advised to begin adjusting their logistics and customs compliance strategies now in preparation for these upcoming changes.&nbsp;
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<h3>Antidumping Cases in the U.S. and Europe&nbsp;</h3>
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The U.S. Customs and Border Protection has initiated new antidumping investigations targeting Chinese-origin Lysine (feed-grade only at this time) and Erythritol. These cases may result in additional duties pending final determinations. In parallel, the European Union is moving forward with antidumping measures on Choline Chloride imported from China, which are expected to take effect by the end of 2025. These regulatory actions could affect pricing, availability, and preferred sourcing markets across the feed and nutrition sectors.&nbsp;
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<h2>2. Logistics Update&nbsp;</h2>
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<h3>Preemptive Shipping Surge Ahead of Tariff Uncertainty&nbsp;</h3>
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In response to the initial round of U.S.-China trade discussions held in Geneva, a temporary 90-day pause on further <a href="https://www.reuters.com/business/trump-announces-30-tariffs-eu-2025-07-12/">tariff changes</a> is set to expire on August 15. As a result, many suppliers are accelerating shipments ahead of mid-July in an effort to position inventory before any new duties or regulatory shifts are introduced. This preemptive activity is causing a short-term spike in outbound logistics volume, particularly from China-based vendors. Buyers should anticipate potential delays or capacity constraints during this period and consider adjusting lead times accordingly.&nbsp;
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<h3>Freight Rates Holding Steady&nbsp;</h3>
Despite increased shipping activity ahead of tariff deadlines, freight costs remain stable. There have been no significant fluctuations in ocean or air cargo rates as of early July, though market conditions may shift depending on volume trends and policy developments in the coming weeks.&nbsp;
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<h3>Modest Growth in Non-China Imports as Chinese Shipments Remain Suppressed&nbsp;</h3>
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Recent reports from multiple trade data sources indicate a modest uptick in U.S. imports from non-China origins, including Southeast Asia and Latin America. In contrast, shipments from China continue to lag, reflecting ongoing tariff pressures and shifts in sourcing strategies. This divergence suggests a gradual diversification of <a href="https://www.ingredientsonline.com/blogs/geopolitical-challenges-global-supply-chains/">supply chains</a> away from China, though overall volumes remain below pre-trade tension levels.&nbsp;
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<h2>3. Accelerated Manufacturing Relocation</h2>
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In response to ongoing trade tensions and long-term tariff risks, several China-based companies are beginning to shift manufacturing operations abroad. These strategic investments, targeting regions such as Southeast Asia, Mexico, and Eastern Europe, are intended to mitigate exposure to U.S. trade policy and ensure more resilient access to global markets. This trend is beginning to influence the ingredient and supplement sectors, with new facilities being positioned closer to key demand centers to reduce shipping times, duty costs, and regulatory friction.&nbsp;
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<h3>Shifting Production to Third Countries&nbsp;</h3>
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To circumvent steep U.S. tariffs on Chinese-origin goods, several manufacturers are establishing production facilities in countries such as Egypt, Vietnam, Thailand, and India. These sites serve as alternative export hubs for supplying the U.S. market without the direct tariff burden. While this strategy provides short-term relief, it carries residual risk, particularly under the broader scope of U.S. trade policy, which may eventually impose duties or restrictions based on country-of-origin rules or circumvention concerns.&nbsp;
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Read Also: <a href="https://www.ingredientsonline.com/blogs/developing-allergen-management-system-guide/">How to Develop an Effective Allergen Management System</a>&nbsp;
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<h3>Establishing Operations in the U.S.&nbsp;</h3>
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A growing number of firms are opting to invest directly in the United States by building new manufacturing facilities, expanding existing sites, or acquiring local warehouses. This approach offers the most complete protection against tariff exposure and positions companies closer to end markets. However, it also demands rigorous cost-benefit analysis, factoring in higher labor costs, availability of raw materials, regulatory compliance, and long-term ROI. Some companies are starting with warehousing and logistical operations as a lower-risk entry point before scaling to full production.&nbsp;
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<h2>4. The Next Competitive Frontier: Securing Strategic Resources&nbsp;</h2>
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Just as rare earth elements are foundational to high-tech manufacturing, the ingredient industry depends on critical raw materials—corn, oil derivatives, and agricultural harvests among them. These base resources will increasingly determine which players can scale reliably and competitively in a shifting global market.&nbsp;
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To understand how future manufacturing hubs will evolve, it's essential to evaluate key cost and supply factors:&nbsp;
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&nbsp; &nbsp; &nbsp;• Labor – Availability, wage levels, and productivity&nbsp;
&nbsp; &nbsp; &nbsp;• Energy – Cost per unit and stability of supply&nbsp;
&nbsp; &nbsp; &nbsp;• Raw Materials – Pricing trends and regional access to inputs&nbsp;
&nbsp; &nbsp; &nbsp;• Manufacturing Techniques – Efficiency, automation, and IP considerations&nbsp;
&nbsp; &nbsp; &nbsp;• Infrastructure – Cost of building and maintaining production facilities&nbsp;
&nbsp; &nbsp; &nbsp;• Government Incentives – Tax credits, grants, and regulatory support&nbsp;
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The U.S. government is actively encouraging domestic manufacturing as part of a broader national security and <a href="https://www.ingredientsonline.com/blogs/factors-reshaping-supply-chain-2025/">supply chain resilience</a> strategy. While new incentives are emerging, the pace and structure of support vary from state to state. These dynamics will shape investment decisions in the months and years ahead—and will be a major point of discussion at the upcoming IO Summit on October 28 in Las Vegas, where public and private sector leaders will weigh in on what it takes to manufacture smarter, closer to home.&nbsp;

Stay informed on the latest trends, price changes, and industry knowledge in the bulk raw ingredients market with our July 2025 update. Read more!

Market Update: July 2025

<a href="https://www.ingredientsonline.com/blogs/market-update-july-2025/"><img style="margin-right: 12px; float: left; margin-bottom: 30px;" src="https://gwiadmin.ingredientsonline.com/media/wysiwyg/blog/Preview-Image.png" alt="" width="503" height="272"></a>
As US-China trade talks show cautious progress, businesses face a complex web of new challenges including upcoming tariffs on Japanese and Korean imports, the elimination of duty-free shipments under $800, and fresh antidumping cases. Companies are racing to relocate manufacturing from China to alternative hubs in Southeast Asia, Mexico, and even the United States itself. With freight costs holding steady but shipping volumes surging ahead of policy deadlines, the race is on to secure strategic resources and build resilient supply chains. Discover how these sweeping changes are transforming the ingredient and supplement sectors, and what factors will determine which companies thrive in this new competitive landscape.