Tariffs on Baby Formula Returned. So Did the Shortages.

“When supply chain issues caused a baby formula shortage last year, Congress (eventually) cut tariffs to help get more formula onto American store shelves.
It worked! Imports of baby formula soared during the second half of 2022 after tariffs and other regulations were lifted. Stores reported lower out-of-stock rates and news stories about panicked parents being unable to feed their infants abated. In short, the government removed economic barriers and the market solved the problem.

Then, the government put those barriers back in place. On January 1, the tariffs on baby formula returned. Now, so has the crisis.

“It’s getting harder and harder” to find baby formula, pharmacy owner Anil Datwani told Fox News this week. “[Mothers] go from one store to the next store to the next store” looking for baby formula.

Meanwhile, some consumers are complaining on social media that prices for baby formula have suddenly spiked and availability is once again a problem. A Forbes investigation into a recent increase in the price of Enfamil baby formula noted that the increases “follow the expiration of the U.S. government’s suspension of infant formula tariffs in January, which opened the door for formula (both foreign and U.S.-produced) to become more expensive.” (Another contributing factor: Reckitt Benckiser, the British-based company that owns the Enfamil brand, issued a recall in February affecting about 145,000 cans of formula.)

Because that’s what tariffs do, of course. They are import taxes that protect domestic industries at the expense of domestic consumers, who are subjected to limited supply and higher prices as a trade-off for industrial protectionism.”

Why does the WeWork guy get to fail up?

“The housing shortage is certainly a big deal. The US was short nearly 4 million housing units as of late 2020, and the problem is spreading across the country. The inability to buy a home has huge repercussions on everything from Americans’ quality of life to their ability to create wealth. The problem is big enough that venture capital firm Andreessen Horowitz (a16z) is writing its biggest check to date — $350 million, valuing the company at $1 billion — to invest in Flow with the hope that the company can disrupt residential real estate through technology.”

‘Enormous’ fertilizer shortage spells disaster for global food crisis

“A global fertilizer crunch is threatening to further starve a planet that’s already going hungry.
Officials at the United Nations and beyond are stepping up warnings about the mounting crisis for fertilizers — an essential substance to boost soil fertility — as vulnerable countries in areas such as Africa grapple with prices that have soared by 300 percent since Russia’s war in Ukraine began.

The continent, where smallholder farmers feed the majority of people, is already lacking 2 million metric tons of fertilizer, according to the African Development Bank. The high price of fertilizers will mean less food at a time when people need it most, with more frequent bouts of extreme weather and the Ukraine war still leaving import-dependent countries insecure. Farmers in Europe are feeling similar strains, though to a lesser degree.”

“Making fertilizers is an energy-intensive process, especially for nitrogen-based fertilizers, which use natural gas as an essential ingredient. That means the price of fertilizers tends to correspond with energy costs.

“The increased price is [a] burden for all farmers in the world, but the burden is even higher for those farmers in developing countries that have less financial capacities and organisation to purchase the fertilisers than the European ones,” an EU official wrote to POLITICO.”

“Fertilizer prices were high even before Russia invaded Ukraine, which prompted a further 50 percent spike, according to the European Commission.

The war in Ukraine has exacerbated the problem because of Russia’s outsized role in the world fertilizer market. It’s the world’s top exporter of nitrogen fertilizers, the second largest supplier of potassium and the third-largest exporter of phosphorus fertilizers.

Since its invasion of Ukraine in February, shipping costs and energy prices have gone up. Europe’s fertilizer producers now warn of shortages if the Continent’s imports of natural gas from Russia continue to fall.”

Hospitals struggle with staff shortages as federal Covid funds run out

“Hospitals across the country are grappling with widespread staffing shortages, complicating preparations for a potential Covid-19 surge as the BA.5 subvariant drives up cases, hospital admissions and deaths.

Long-standing problems, worker burnout and staff turnover have grown worse as Covid-19 waves have hit health care workers again and again — and as more employees fall sick with Covid-19 themselves.”

San Francisco Legalizes ‘Missing Middle’ Housing in the Worst Way Possible

“There’s a clear lesson emerging from the first cities that have legalized “missing middle” housing. The more rules you lift on the construction of these two-, three-, and four-unit homes, the more you’ll actually see built.
San Francisco politicians have absorbed this information and are now using it for evil. On Tuesday, the San Francisco Board of Supervisors passed an ordinance theoretically legalizing fourplexes in the city’s lowest density neighborhoods, but only under conditions that will ensure almost none of this housing actually gets built.”

FDA Finally Admits It Caused the Baby Formula Shortage

“it’s the FDA’s unnecessary and protectionist rules that effectively ban foreign-made baby formula from being imported into the United States. On Wednesday, the agency announced plans to tweak those rules so foreign formula manufacturers can permanently import their goods into the U.S., giving American consumers greater choice in the marketplace and ensuring more robust supply chains.”

” When the Abbott Nutrition plant in Michigan was forced to close temporarily due to an FDA investigation into possible contamination, it created a supply shock that left store shelves empty and parents scrambling to find formula. Because of the FDA’s protectionist rules (and high tariffs levied on foreign-made formula), markets could not adapt quickly to the shortage here in America”

“In testimony to Congress, FDA officials admitted to botching the response to the contamination at the Abbott plant. But the real culprit of the recent shortage was a deeper and more pervasive one. No matter what nationalists like Sen. Josh Hawley (R–Mo.) might suggest, closing off the country to international trade is not a recipe for resilience. The baby formula crisis demonstrated that it is quite the opposite.
So it’s good to see the FDA admit those mistakes and crack open the door to allowing foreign formula into the U.S. on a permanent basis.

Unfortunately, the list of policy changes the FDA announced..mostly amounts to providing technical assistance to foreign firms that want to sell formula here. That is, offering help in navigating the complex approval process, rather than sweeping aside those regulations entirely. If a formula maker has passed muster under E.U. regulations, that should be good enough for the FDA.

There’s also the matter of tariffs on imported formula, which are so high that they effectively make any imported formula uncompetitive in the American market. Why would a foreign manufacturer like Holle or HiPP go through the complicated FDA approval process (even after the announced changes) if it knows in advance that its goods won’t be able to compete on a level playing field in America?”

Sri Lanka’s protests are just the beginning of global instability

“Sri Lanka’s economy is in free fall. The country doesn’t have enough money to buy essentials: food, medicine, and especially fuel. Buses can’t run, schools can’t open. The economic crisis was years in the making because of mismanagement, but terror attacks in 2019, and later the Covid-19 pandemic, which shriveled Sri Lanka’s tourist economy, pushed it to the brink.

But the domestic political turmoil unfolding in Sri Lanka also links back to the instability across the globe, including the war in Ukraine and all of its consequences.”

“I tend to believe in markets, but I will say that markets for basic necessities like food, these are not markets you want to operate according to cold economic logic. The market for food is not a market where you want to wind up at the end of the sale with no available supply. We can’t have that because we need to have buffers in the system precisely because of events like the ones we’ve seen. And so if that’s physical grain reserves, [or] if it’s governments willing to use what they call virtual reserves, which are basically governments, in a coordinated fashion, intervening in markets to short these futures contracts to drive prices back down.

There are things that can be done. It’s just going to take an investment of resources and, I think, broader awareness of the enlightened self-interest that it does not make the United States any safer and more prosperous to exist in the world where many of our trading partners and many of our strategic partners around the world are facing instability because they can’t feed their populations.”

The Southwest is bone dry. Now, a key water source is at risk.

“Despite the oppressive dryness that has plagued the region for more than 20 years, California has, in large part, avoided reductions to its usage of the Colorado River. But now that reservoir levels have fallen drastically, the Golden State may be forced to use less water, a prospect that would only further strain a state that is already asking residents in some regions to stop watering lawns and take shorter showers.”

“Over the past 20 years, as the effects of climate change have become more apparent, water authorities in their respective states have been able to hammer out agreements on moderate cutbacks. But it hasn’t been enough.
Supplies at Lake Mead and Lake Powell are dangerously low, holding just more than a quarter of their total capacities — and threatening the dams’ ability to generate electricity and provide water to its nearly 40 million users. At its highest level, in the 1980s, Lake Mead could have submerged the Empire State Building up to its top floor. Now, water levels have dropped by nearly 200 feet, or 20 stories, exposing a stark white “bathtub ring” around the rocky walls of the perimeter.

The new reality will force the region to shift away from a water source upon which it has relied for centuries, and, in some cases, make tough choices that are sure to ripple nationwide — such as whether to continue alfalfa farming for cattle feed or switch to more drought-hardy crops. The terms laid out in the coming weeks could offer a new blueprint for how America adapts to the increasingly-difficult realities of climate change.”

Eric Adams’ Emergency Price Controls on Baby Formula Will Make the City’s Shortage Worse

“The country’s ongoing shortage of infant formula has been exacerbated and prolonged by a long list of counterproductive government interventions: from tariffs and trade restrictions to price-distorting subsidies and nonsensical labeling requirements.

New York City Mayor Eric Adams has decided to throw one more log on the fire by issuing an emergency order limiting price increases on infant formula.

“The nationwide infant formula shortage has caused unimaginable pain and anxiety for families across New York—and we must act with urgency,” said Adams on Sunday. “This emergency executive order will help us to crack down on any retailer looking to capitalize on this crisis by jacking up prices on this essential good.”

The mayor’s order invokes city rules that prohibit merchants from raising prices more than 10 percent from where they were 30–60 days preceding the emergency. Adams urged people to report potential gouging to the city’s Department of Consumer and Worker Protection.”

“sudden price hikes discourage people from engaging in harmful and unproductive hoarding.”

“Higher prices make once unprofitable activities suddenly lucrative. For example, it’s usually not profitable to drive 100 miles to sell people bags of ice. That calculation changes when a hurricane drives up the price of ice to $15 a bag.

Conversely, if price gouging laws force a bag of ice to be sold at $1, hurricane or not, a lot fewer potential suppliers are going to be induced to take that trip. The result is more people go without ice.

Adams’s order will similarly deprive New Yorkers of much-needed formula. Out-of-city suppliers who might have incurred higher transportation costs to reap the rewards of higher prices in the Big Apple will instead sell off closer to home. That’ll be particularly true if they’re located in a jurisdiction that hasn’t banned market prices on baby formula.

The federal policies driving the formula shortage—whether that’s prohibitive tariffs on baby formula or labeling rules that keep European products off the market—are outside the control of local officials like Adams, who are nevertheless expected by their constituents to do something.

The least the mayor could do, however, is not make the formula problem worse. His emergency order shows he can’t even clear that bar.”