Formula Act
Summary
The Formula Act (HR8351), signed into law July 21, 2022, temporarily suspended duties on imported infant formula through December 31, 2022. This was a targeted response to the 2022 infant formula shortage, reducing import costs for companies like Abbott ($ABT), Perrigo ($PRGO), and Reckitt Benckiser ($RBGLY). The impact is modest and retrospective, with no ongoing market effect.
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Key Takeaways
- 1.The Formula Act temporarily eliminated tariffs on imported infant formula from July to December 2022.
- 2.Importers Abbott, Perrigo, and Reckitt Benckiser saw modest cost savings, but the impact was small relative to their total revenue.
- 3.The law expired at the end of 2022 and has no ongoing market effect.
- 4.Related legislation (HR8174) signals continued congressional interest in infant formula supply chain resilience.
Market Implications
The Formula Act is a historical event with no current market implications. The tariff suspension was temporary and expired December 31, 2022. The infant formula sector has since normalized, with supply chain disruptions resolved. The act did not change the competitive landscape or create lasting advantages for any public company. Investors should look to current legislative actions for relevant signals.
Full Analysis
The Formula Act became Public Law 117-160 on July 21, 2022, during the 117th Congress. It provided duty-free treatment for specified infant formula products under the Harmonized Tariff Schedule, waiving additional safeguard duties, quotas, and other charges. The law applied to goods entered or withdrawn from warehouse for consumption on or after enactment and before December 31, 2022.
This is a temporary tariff suspension, not an authorization or appropriation of new funding. The economic impact is limited to the period of the suspension, benefiting importers of infant formula. The primary beneficiaries are companies that import formula into the US: Abbott (imports of specialty formulas), Perrigo (private label imports), and Reckitt Benckiser (Enfamil imports). US-based manufacturers like Abbott's domestic production were less affected.
The convergence with the related bill HR8174 (Affordable and Accessible Infant Formula Act) shows a broader legislative interest in stabilizing the infant formula market, though HR8174 did not advance during the 117th Congress. The Formula Act was a direct legislative response to the 2022 shortage, which saw FDA enforcement discretion and increased imports from overseas facilities. However, the temporary nature means no sustained market tailwind.
Structural winners are importers of foreign formula, with modest cost savings relative to overall revenue. The bill did not affect domestic manufacturing economics. Since the law has expired, there is no current market impact. Investors should view this as a historical policy action that provided temporary relief during a supply crisis.
Connected Signals
Matched on shared policy language across AI analyses, with ticker & timing weight
Bulk Infant Formula to Retail Shelves Act
Access to Baby Formula Act of 2022
To amend the Federal Food, Drug, and Cosmetic Act to establish standardized pathogen and microorganism testing of infant formula products and manufacturing facilities, to mandate notification of specific positive tests and inspection classifications, and for other purposes.
Protect Infant Formula from Contamination Act
Related Presidential Actions
Executive orders & memoranda affecting the same sectors or companies
Advancing Women's Health to Improve Outcomes in All Phases of Life
This executive order establishes a Women's Health Division within the NIH to coordinate and accelerate research on understudied women's health conditions, and creates a White House Women's Health Task Force to drive policy reforms and translation of research into clinical practice across federal agencies. It directs specific agencies to prioritize research, data collection, and translation into prevention, diagnosis, and treatment, with a focus on all life stages from infancy through aging.
Establishment of a Committee of Inquiry to Investigate Allegations of False Statements by Lisa DeNell Cook
This memorandum establishes a committee to investigate Federal Reserve Governor Lisa Cook for alleged false statements related to mortgage instruments, with a hearing scheduled and a recommendation on removal. It directs the Attorney General, Counsel to the President, and others to participate, and sets a timeline for findings.
Enhancing Program Integrity and Integrity and Interagency Coordination in the Administration of the H-1B Nonimmigrant Visa Program
This executive order directs the Secretaries of State, Labor, and Homeland Security to coordinate with Commerce, Education, and the SBA when processing H-1B petitions, and requires them to consider whether the employer has engaged in layoffs of similarly situated U.S. workers within the past year. It also orders the Labor Department to review past labor condition applications for potential enforcement actions against sponsoring employers, effectively tightening scrutiny on H-1B usage, especially by outsourcing firms.
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