Trump against China: Tariffs War hits Medical Device Manufacturers

The President of the United States, Donald Trump, followed up on his presidential campaign promises to adjust the “long term abuse of the broken international system and unfair practices” of China, involving the United States in what has become a trade war.

On July 6, 2018, the Trump administration, relying on Section 301 of the Trade Act of 1974 (conferring the President the authority to enforce fines or other penalties on a business partner if retained to unfairly damage the commercial interests of the United States), has begun to impose radical tariffs on China for its reputedly unfair trade practices. In response, China retaliates by imposing their own tariffs on U.S. made products and, with each passing month, the conflict escalates through a perpetual series of threats and reprisals.

The chronology of the “tariffs war” highlights is presented here below:

  • Trump Administration implements 25% tariffs on $34 billion of imported finished Chinese goods, medical devices included;
  • To counteract the moves of the White House, China applies tariffs on $1.125 billion in medical devices manufactured in the United States;
  • The Trump administration proposes 10% tariffs on additional 6000 Chinese goods, amounting to $200 billion. The component parts manufactured in China and used to manufacture medical devices in the U.S. are mostly hit
  • China implements retaliatory measures of 25% on goods imported from the U.S. worth $16 billion, including medical equipment.

With the latest retaliatory measures, China has particularly struck the medical technology field that produces devices for imaging and diagnostics.

Manufacturers of magnetic resonance imaging devices (MRIs), electrocardiograms, CT scanners, ultrasound devices, and X-ray equipment have expressed their concerns regarding the imminent rise of consumer prices and a possible decline in productivity in the sector (due to disruptions in the supply chain, innovation slowdown and imminent inflation).

One can hypothesize that the U.S. “tariffs war” against China could prevent U.S. manufacturers to remain competitive in the long run in the global economy.

 

Sources:

https://www.gpo.gov/fdsys/pkg/FR-2018-06-20/pdf/2018-13248.pdf

https://ustr.gov/sites/default/files/301/2018-0026%20China%20FRN%207-10-2018_0.pdf