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12. 07.2018

Trump tariffs place nearly $1 billion in duties on the medtech industry

The U.S. medical device industry is facing nearly $1 billion in tariffs from the Trump administration, about $4 billion less than what was originally expected. Customs and Border Protection began collecting the additional duties on July 6.

The Trump administration announced in April that it intended to impose tariffs on $50 billion worth of Chinese imports as part of a plan to keep American companies from manufacturing their technology in China and transferring intellectual property to domestic Chinese enterprises.

AdvaMed initially predicted that the medical device industry was facing about $5 billion worth of tariffs on medical device and technology products from China, many made by U.S. companies. Then they knocked the estimate down to $2.8 billion worth of medical device and technology products. Now the number is down to $836 million, though the new plans to impose tariffs on an additional $200 billion in Chinese goods could add less than $100 million to the $836 million amount.

Through its lobbying, AdvaMed was able to get some types of medical devices removed from the list, according to Greg Crist, executive VP of public affairs at trade group AdvaMed. Crist declined to disclose which devices.

While it is still going to be a little more expensive to import devices like pacemakers and ultrasound equipment, it’s too soon to tell if that’s going to have any implications on patient access,  Crist said.

When the U.S. Trade Representative proposed in April to impose an additional 25% tariff on $50 billion worth of imports from China, it included about $2.8 billion in medtech, according to Ralph Ives, executive VP of global strategy and analysis at AdvaMed. “We sought to remove medtech from the Section 301 action due to concerns about the adverse effects on our competitiveness, as well as the potential longer-term impact on patient access to medical technology.”

The original tariff list included more than 1,300 separate tariff lines, 30 of which were finished medical devices. These included pacemakers, ultrasound, CT scanners, needles, catheters, radiation therapy and more.

“U.S. medical device companies have benefitted from setting up factories in China,” said Grace Palma, CEO of China Med Device. “With five times the U.S. population and low healthcare standards, as well as a very under-developed medtech industry, most of the large U.S. companies have benefitted from setting up local factories to reduce cost and provide easier access to local populations.”

By the beginning of June, the Trump administration continued to wrangle over trade policies and threats and the medtech industry was left in the dark about how much it would be facing in tariffs. On June 15, the administration announced its final list of imports.

China isn’t the only country where Trump has the U.S. fighting a trade war. The U.S .is also in the midst of trade disputes with Canada and the European Union, though the trade disputes mostly involve steel and aluminum.

Source: Medical Design & Outsourcing