Medical devices in a doctor's office

What the Trade War with China Means to the Medical Industry

If you rely on a pacemaker, an implanted defibrillator, a prosthetic hip, wear contacts or need an MRI, then you should be concerned about the constant threat and imposition of tariffs on Chinese imports by the Trump Administration. Using Section 301 of the Trade Act of 1974, President Donald Trump imposed new tariffs on an array of Chinese imports based on the assertion that they were stealing United States intellectual properties. The first volley occurred in July 2018 when the administration applied tariffs of 25% to over $34 billion in Chinese imports, and then again in August 2018 when it added another $16 billion in products to the list.

In an ongoing tit-for-tat, on May 10, 2019, the United States raised tariffs from 10% to 25% on an additional $200 billion worth of Chinese goods, including many health care products, from surgical gloves to chemical reagents. While medical supplies are only a small, biopsy-sized sample of the goods that will face these tariffs, they are sure to have some impact on an already financially burdened health care delivery system here in the United States. This will result in higher prices for health care products, devices, and components that are all passed off to the consumer.

Increased Health Care Costs and Job Loss

One of the sectors most affected is the medical imaging industry. Medical imaging components from x-ray to ultrasound to MRIs were among the most affected by the $836 million worth of Chinese medical devices and supplies affected by these new taxes. This is sure to create a downstream effect on both lack of access and increased cost of imaging studies for Americans in an already cost-burdened medical system. By one estimate, the newly imposed tariffs could end up increasing health care costs of medical equipment by $400 million nationwide.

The impacts are not just limited to health care costs. In a letter to the United States Trade Representative, the Medical Imaging and Technology Alliance warned of decreased spending on research and development as well as lost jobs and decreased salaries. It is likely similar impacts would be seen in industries that produce medical lasers, microscopes, and electrosurgical instruments. In an attempt to protect intellectual property practices and technology transfer, these tariffs may in fact reduce research and development, result in layoffs, and increase unemployment in the medical equipment sector.

China Fights Back

Adding insult to injury, China struck back with tariffs of their own. China imposed $60 billion in tariffs on US goods, causing stock markets to plummet, if even just for a few days. President Trump took to Twitter to respond, stating that China “may as well wait around for the next election, 2020, to see if they could get lucky & have a Democrat win.” This set the stage for an ongoing volley of potential tariffs (all with significant financial impact), erosion of job security, and the potential for disrupting important research and development in the health care industry.

A Reprieve?

As of June 29, 2019, there has been a little less fist-waving and a little more come-to-your-senses mentality between the two nations. While Trump stated that he wasn’t particularly thrilled with the agreement and lacking any significant insight to what the future may hold, President Trump and Chinese President Xi called a truce, promising to hold back on tariffs. Only time will tell how long the truce will last. It is imperative, however, that watchdogs of the health care industry keep a close eye on on this ever-looming issue. Consumers should also be made aware of the potential impact on health care costs across the board as the United States and China arm wrestle over trade agreements. The impact could truly cost you your life.

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Stephen Wood

Stephen P. Wood, MS, ACNP is an acute care nurse practitioner practicing emergency medicine in Boston, Massachusetts, and a fellow in bioethics at the Center for Bioethics at Harvard Medical School in Boston. He is also a consultant for the Southern Middlesex Regional Drug Task Force, and the New England Coalition Against Trafficking; the chair of the Winchester Hospital Substance Use Task Force; and the co-chair of the Southern Middlesex County Mental Health Working Group. In addition, he is a lecturer at Northeastern University in the Bouvé College of Health Sciences.

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