Tariffs & the Clinic
Today's blog is on a topic we're all already tired of thinking about: tariffs. But, in my conversations with people the past few weeks, patients have had questions on how tariffs will or won't affect pricing at the clinic and product availability, so I will take some time today to attempt to answer some of the questions people have had. The information changed literally as I was writing this entry, so it is impossible to anticipate every outcome!
In this entry, I cover:
What is a tariff? And how is it involved in setting prices?
How will tariffs impact the clinic?
What am I doing in the clinic to lessen the impact of tariffs?
What can you do about tariffs?
You’re welcome to skip to the parts that are most important to you, but I encourage you to read it all!
What are tariffs?
Let's start at the beginning: what are tariffs? Tariffs are a fee applied to goods imported into the country. Contrary to misinformation, tariffs are not paid by the country sending the item; they are always paid by the company importing the items. The fee is paid at the port of entry before being released to the company.
But we need to go back even further. Here's a little behind-the-scenes info on pricing products: Company A imports items from wherever they are manufactured. When they reach the port of entry, any fees and taxes are added. Company A combines the price they paid for the item, plus any fees, and calculates a "wholesale" cost. This cost is what Company B, the retailer, pays Company A for the item. Company B then calculates the "retail" price of the item based on the cost they paid, plus the overhead of their business (rent, wages, etc). This price is the price you see on the shelf. (This is a simplified example - sometimes there are more steps in the middle.)
So, if Company A is paying a higher price to import a good, this increases the "wholesale" cost of the item, which means Company B will, in turn, increase the price of the item when it is sold at "retail" cost, or the cost on the shelf. This is how tariffs will increase the price of goods and services.
Let's talk numbers: When you see a tariff that is 100%, keep in mind this is effectively doubling the price of an item.
If an item costs $5 and the tariff is 100%, the cost of the item is now $10.
If the tariff is 145% - the paused rate set for China - then the item is now $12.25.
The current tariff rate for most goods from China is an average of 124%, so our $5 becomes $11.20.
Other countries have other tariff rates, but most are paused; there is a base 10% increase on all imports.
You can probably see how impossible it would be for a business to absorb this much of a cost increase! That is why you are seeing prices rise on many goods, whether they are being imported from China or somewhere else - because, remember, every country has had a tariff applied; it is just a matter of how much. (If this sounds like a bad idea, it’s because it is.) A lot of companies have just stopped importing things altogether because of the uncertainty around tariff pricing; this is also going to be problematic.
What does this mean for the clinic?
There are certain products that I have to have to run an acupuncture clinic. Some are obvious, like acupuncture needles and herbal remedies. Others you may not realize, like alcohol swabs, cleaning products, and even plastic sharps containers. Most of these products are not manufactured in the United States, and I can't choose to switch to a US-based manufacturer because they don't exist. The short answer is that nearly everything I use in the clinic will likely increase in price; it is just a matter of how much and when.
Acupuncture needles are fairly straightforward. My acupuncture needles are manufactured in South Korea and are imported by another company, which is where I buy them from. This means that the price for acupuncture needles will eventually increase, but not as much as if they were manufactured in China. (South Korea's tariff is much lower than China's.)
Herbal remedies are much more complicated. Some companies manufacture the formulas in the US, some in China, some in Taiwan (among other locations). Regardless of where they are manufactured, most herbs included in the formulas originally come from China.
While it may initially seem like we could just start growing the plants in the US, it is not that simple. As Diana Hermann, founder of CMD Skin Solutions (a Chinese medicine-focused dermatological company), beautifully put it:
"...these medicinal herbs are grown in China and cannot currently be sourced anywhere else in the world. The herbs used in Traditional Chinese Medicine have been cultivated in China for generations upon generations. The climate, soil conditions, agricultural expertise, and processing of these herbs requires highly specialized knowledge and centuries-old techniques that are deeply rooted in China’s herbal tradition. These growing conditions, as well as the harvesting and processing knowledge, cannot currently be replicated in the U.S. at the scale or quality necessary for producing standardized medicine from these plant species." (emphasis added)
There has been a small movement trying for many years to start growing what herbs we can in the US, but it is nowhere near the scale needed to replace the current supply. And, as the quote above describes, we simply don't have the climate needed to grow some of the herbs in the US. Even if we did, that solution is many years away - plants take time to grow! For example, some roots must grow for multiple seasons before they can be harvested.
With all that said, let’s talk about specifics for herbal formulas. I primarily use two brands of herbal formulas in the clinic, Kan Herbs and Blue Poppy Herbs. Kan Herbs manufactures its formulas in the US with imported herbs. Blue Poppy's herbal capsules are manufactured in China and then imported. Typically, these products are made in LARGE batches, so the cost increases are likely further down the road when new products need to be imported, but this will vary based on the manufacturer. From what I can tell, in the long term, the best case scenario will be using products manufactured in Taiwan and then imported into the US, and I may look to go this route depending on price increases.
What am I doing in the clinic to manage price increases?
I don't anticipate needing to raise prices for appointments for now. I purchased a pretty large supply of acupuncture needles last year in anticipation of tariffs, so I am insulated from price increases on acupuncture supplies for a bit. However, I may need to raise prices in the future if other supply costs increase significantly.
Herbal remedies are a bit more touch-and-go, but I will do my best to keep pricing as low and fair as possible. Here are some details and alternatives:
Herbal remedies, as always, are priced based on the price I pay for them, and so they will likely increase in the future; this increase depends on the formula and brand, as well as how tariffs are applied. Unfortunately, I don’t know when or how much this will be, but I will keep you updated when I know.
I have some herbal formulas in back stock, but it's not practical or possible for me to have huge quantities on hand to offset the unknown costs for an unknown amount of time.
We can try other formulas and/or other brands. We can also focus on using more on Western/US-grown herbs (which I also have training in!) to help manage costs, but these won’t be a 1-for-1 replacement.
We can emphasize food therapy that is customized to your pattern; this can be a really hands-on, effective way to manage your health with or without herbal remedies.
What can you do?
We, as individuals, can’t do much to push back against tariffs.
Two of the most important, impactful things I think you can do are:
Continue to support small businesses (and very small businesses!) you care about, when you can - both by spending money with them, but also spreading the word about them to family and friends! I know this is tricky when the cost of everything is increasing. We all can only do what we can.
Always remember where the cost increases are coming from, and don't fall for false narratives. Your bookstores, coffee shops, boutiques, artists, and yes, acupuncturists, want to offer you the best prices they can. They would rather not raise their prices, and the price increases you will see are not going to the business.
You can contact your senators and representatives if you like writing letters/emails. Somewhat surprisingly, Senator Grassley introduced a bipartisan bill to limit the President's ability to impose tariffs - you could let him know if you support this. You could reach out to your other Reps to ask them what they're doing to help. You can also sign petitions asking for tariff exemptions if you come across them. I’d also encourage you to speak with family and friends who may have some misunderstandings about tariffs, if possible.
Added Monday, May 12: The tariff information has changed again since writing this - there's a temporary agreement of 30% tariffs for 90 days with China now. Rather than continuously updating this entry every time there is a shift, I will leave it as it is, as the main points still stand. As always, feel free to email me if you have any questions!
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