The labelling requirements don't strike me as that stupid; the Reason article links [1] with the text "formula available in Europe tends to meet or exceed the FDA's nutritional requirements, but not the labeling requirements", but it actually provides some good reasons:
"It was found that European formulas do not meet all FDA label requirements, including many not being in English, which may lead to the incorrect mixing of formula [mixing tends to be different for European formula]. The average listed nutrient levels of all but one of the identified imported European formulas fell within the minimum nutrient level requirements of the FDA. As the nutrient levels on the labels of European formula represents an average and not a minimal level, it is difficult to compare the actual contents with US formulas. In addition, it is important to note that hypoallergenic is defined differently in Europe than in the United States. Therefore, partially hydrolyzed European formulas may be labeled as ‘‘hypoallergenic’’ or HA, which is not appropriate for infants with CMPA and may lead to improper treatment of an infant with CMPA."
Expiry dates as being in EU formats (i.e. for the US' weird m/d/y thing) was also mentioned, as well as using US measurements rather than metric (whether the US date style and imperial units are a good idea is besides the point here: fact is it's what people use).
There were also some other much more minor issues, but these don't seem entirely unreasonable or "stupid" to me, especially the requirement that labelling should be in English, but also the different definition of hypoallergenic.
These problems are fairly minor and can be fixed without too much effort though.
[1]: https://naspghan.org/wp-content/uploads/2019/10/October-2019...
Labeling requirements are common practice everywhere. And the solution is for exporters to print a new label that conforms to the requirements and place it on the product.
Some other requirements (like not having enough linoleic acid or iron) are perhaps more problematic than just the labels, and allowing formula which doesn't quite meet the requirements is a kind of unfair competition (that they happen to be imported from the EU is not really important as such).
Is that actually true? I would expect formula to be the kind of thing that has a very consistent demand profile, and there wouldn't be a lot of surge capacity in the European manufacturing plants.
Which we are not with regard to infant formula; as the article notes, there's plenty in Europe that meets standards at least as stringent as US standards, the FDA just won't let US customers buy it because of stupid labeling requirements.
Also, your implication that in a global bottleneck, free trade doesn't work as well as other solutions, is not correct. Free trade has the least severe failure modes in global bottlenecks, precisely because there are no artificial impediments that get in the way of producers adjusting to market conditions according to straightforward economic incentives.