Some medical devices exempted from China tariffs

July 15, 2019
by Thomas Dworetzky, Contributing Reporter
Last week, the Trump administration announced it would exempt 110 Chinese products, including some medical equipment, from its 25 percent tariffs placed on $34 billion of Chinese imports on July 6, 2018.

The exclusions are retroactive to that date, according to Reuters, and will be in place for a year from last Tuesday.

The U.S. has levied tariffs on $250 billion on imports from China and now threatens to tax another $300 billion.

There were 12 exclusion requests granted to Medtronic, including one for a component in a device used to treat liver tumors.

Varian Medical Systems also received an exclusion for some of its equipment after claiming that that the tariffs would only hurt their firm, as there are no other “good alternatives,” noted Reuters, and that it would hurt it against European competitors.

Other device components that have been exempted include “veterinary ultrasound devices, certain parts and accessories of electro-surgical instruments, and dental X-ray alignment and positioning apparatuses,” according to a report in Medtech Dive.

But according to a June statement to USTR by the Advanced Medical Technology (AdvaMed) Association, which represents over 400 medical device makers, many devices that the group hoped would be exempted, including pacemakers, remain subject to the 25 percent tariff.

“If tit-for-tat retaliation continues, the administration’s objectives for a strong domestic medical technology industry will be undermined. We ask the administration to consider this adverse impact and to remove all medical technology products from its retaliation lists,” it stated.

In addition, it urged that, “including medical technology products on the USTR list is troubling from a public health perspective. Healthcare products have been consistently recognized as being exempt from trade sanctions — even with countries which the United States considers to be security risks.”

An ongoing trade war could threaten the 30 percent market share U.S. makers enjoy in China, AdvaMed noted.

“Chinese patients will continue to have access to innovative medical technology, but from other sources," AdvaMed said in June. "China will look for countries outside the United States — Europe, Japan, Southeast Asia — as alternative sources for U.S. technologies. AdvaMed and our members do not endorse imposing import tariffs on medical technology as a means of changing China’s behavior in our industry.”

In June, AdvaMed sent a letter to USTR expressing its tariff opposition regarding Mexico.

Its president and CEO Scott Whitaker, in the letter to U.S. trade representative Robert Lighthizer on behalf of the industry stated, “AdvaMed strongly opposes tariffs on medical technologies that save and improve countless lives every day. We’ve been engaged with the administration and Congress regarding the proposed tariff increases on products from Mexico to make sure our views are known.”

In May, Varian announced its preliminary estimates of the incremental gross impact of new China tariffs, which were in the range of $3 million to $5 million.

In January, healthcare giant Philips stated that it would shift around production from the U.S. to China and vice versa worth "hundreds of millions" of euros, in order to escape tariffs, CEO Frans van Houten said at the time.

"This is not peanuts,” he said at the time, adding that the changes slated for the first six months of the year “are serious changes to our supply chains.”

It also kept with its earlier prediction that the tariff war would shave nearly $69 million from 2019 profits.