Trump tariffs would take a $5B bite out of the medical device industry


US China medical device industry tariffsThe U.S. medical device industry could come out as a major loser if the Trump administration ends up fighting a trade war with China, according to experts following the situation.

Out of the $50 billion in tariffs against imported Chinese goods that the U.S. Trade Representative is proposing, $5 billion involves medical device and technology products, many actually made by U.S. companies, according to Greg Crist, executive VP of public affairs at trade group AdvaMed.

Crist said that industry officials are “surprised and disappointed” by the situation, especially because the USTR report about potentially unfair Chinese trade practices didn’t even mention medical technology.

According to Crist, that $5 billion number could be higher if you take into account component parts like circuit boards that are not necessarily listed under medical devices on the Harmonized Trade Schedule.

President Donald Trump announced last month that the U.S. plans to impose tariffs on about $50 billion worth of Chinese imports to prevent American companies from manufacturing their technology in China and transferring intellectual property to domestic Chinese enterprises. He also recently threatened to add an additional $100 billion in tariffs on top of the original $50 billion after China announced its own $50 billion in tariffs, which Trump called “unfair.”

“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.”

The proposed list of products facing the tariff includes 1,300 separate tariff lines; the USTR will make a final determination on which products are subject to duties. A total 30 finished medical devices are presently listed on the proposed tariff list, according to AdvaMed. Products including needles, catheters, defibrillators, X-Rays, patient monitoring systems, respiration devices and more will receive increased import taxes.

“It’s also fair to say manufacturers are disappointed because this action threatens to affect the health and well-being of American patients and those around the world,” Crist said.

China proposed its own $50 billion tariff plan as well, but listed only 106 products on its tariff lines. Most of the products it listed were related to agricultural products, but also included auto, chemical and airplane products. Its proposed tariffs have no direct effects on medical device companies, according to Palma.

Palma also mentioned that the medical devices and products that China needs to keep up with its growing population are devices that China cannot develop themselves due to lack of technology. About 35% of imports are from the U.S. The top five imported medical devices and technologies last year in China were implantable materials and artificial organs, optical and endoscopic equipment, dental materials, medical polymer materials and major electronic equipment.

Here is a list of the medical devices and technology that would be affected by the tariffs:

  • X-Ray, generators, screens, desks and chairs associated
  • Ultrasound
  • MR
  • CT
  • Needles
  • Catheters
  • Defibrillators
  • Hearing aids
  • Pacemakers
  • Orthopedic implants and artificial joints, bone plates and screws
  • Radiation Therapy
  • EKG
  • Syringes
  • Scintigraphy, SPECT and PET
  • Patient monitoring systems and blood pressure monitors
  • Ophthalmic devices
  • Anesthesia delivery
  • Psychological aptitude testing apparatus
  • Respiration devices and oscillometers
  • Lots of dental, e.g. drills, burs, fillings, artificial teeth
  • Thermometers and stethoscopes
  • Electrosurgery devices
  • Drains
  • Flu kits
  • Cannulae (tubes)
  • Examination tables
  • Dialysis devices
  • Electromyography, blood grouping and diagnostic reagents
  • Wound care, e.g. adhesive dressings
  • Ostomy appliances
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