Tariffs – International Trade Policy
Key Points
The inclusion of healthcare products in the United States Trade Representative (USTR) Section 301 proposed tariff policy will increase the cost of delivering quality and efficient healthcare in the United States and hinder our country’s ability to prepare and respond to public health events.
- A significant number of medical products critical to everyday procedures, lifesaving surgeries, as well as products used for broad public health preparedness efforts are made outside of the United States
- It is important for both Congress and the Administration to understand the complexities of the U.S. healthcare supply chain, so tariffs and trade policies do not create unintentional supply chain disruptions and product shortages
Background
In April 2018, the Administration released a list of Chinese imports subject to a new, 25% tariff as a result of an investigation conducted under Section 301 of the Trade Act of 1974. The new Section 301 tariffs apply to over 1,300 Chinese imports. Among those listed are a number of products that healthcare providers rely on to conduct ongoing healthcare procedures and respond to public health events.
Outlook
In June 2018, the USTR announced a final list of tariffs which applied to 818 of the 1,333 products that were included on the original proposed list. A 25% tariff on these products went into effect July 6, 2018. In a notice published August 16, 2018, the USTR determined to take additional action and add 25% tariffs to another list of products, which went into effect on Aug. 23, 2018. Then, on Sept. 17, 2018, USTR finalized tariffs on approximately $200 billion Chinese imports. Tariffs went into effect Sept. 24, 2018, initially at 10%.
With members' help, HIDA was initially able to remove 120 products across all three lists, including syringes, medical gloves, bedsheets and certain wipes. In May 2019, the USTR issued a Request for Comments Concerning Proposed Modification of Action resulting in a proposed Fourth List of products for up to 25% tariffs. A number of items previously removed from earlier lists were returned to the Fourth List including gloves, gowns, and wipes. HIDA submitted comments and testified at the hearings. USTR has since published two lists to implement at 10% tariff on product. List 4A went into effect on Sept. 1, 2019 and List 4B went into effect on Dec. 15, 2019. USTR has announced there will be an exemption process for items included on Lists 4A and 4B.
The USTR published a process for seeking exemptions from the tariffs—the determinations will be on a product-by-product basis and final decisions on exemptions will be published periodically. HIDA Government Affairs published a FAQ detailing the USTR exclusion process.