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Analysis

Trump's China Tariffs Expected to Pinch Healthcare Industry

By Steven Porter  
   June 18, 2018

The administration included a variety of medical supplies in a list of Chinese goods subject to a 25% tariff beginning next month.

A tariff on Chinese goods announced late last week by the Trump administration is expected to add financial pressure on the U.S. healthcare industry.

The list of goods subject to the 25% tariff beginning early next month includes a variety of components for sterilization and medical imaging equipment. A second, shorter list of Chinese goods will undergo further review before potentially being made subject to the tariff.

U.S. Trade Representative Robert E. Lighthizer said the move is a defensive tactic to protect Americans against intellectual property theft and other marketplace malfeasance. But some in the U.S. healthcare sector worry the move will harm their enterprises.

"We know the added cost of the tariff will be passed on to healthcare providers," said Blair Childs, senior vice president of public affairs for Premier, in a statement Friday.

The tariffs are "an assault on an industry that is already facing dire financial strains," Childs said, citing margins at their lowest point in the past decade.

"Increased supply costs will apply additional fiscal pressures on hospitals' already strained budgets during a time in which they are making critical long-term investments in care improvements," Childs added. "It's a step backward in our nation's efforts to curb healthcare costs and spending."

  • First list: The first list of products includes 818 line items covering about $34 billion worth of Chinese imports, according to the Office of the U.S. Trade Representative. The added 25% tariff on these products will take effect July 6.
     
  • Second list: The second list of products includes 284 products for which tariffs have been proposed covering about $16 billion worth of Chinese imports. These items will undergo a public notice and comment process, with a public hearing, before a determination is made on whether the tariffs will be implemented.
     
  • Exemptions possible: The USTR noted that it will "soon" provide a way for U.S. companies to request exemptions for particular products that would otherwise be subject to the new tariff. That avenue will be noted in the Federal Register in the coming weeks.

The two lists of items were compiled, based on "extensive interagency analysis," to target certain sectors of Chinese industry, including aerospace, information and communications technology, and more. The lists exclude common consumer goods, such as cellphones and TVs.

China said it would respond to the U.S. with tariffs of its own next month, striking American agricultural products, cars, and seafood, as CNN Money reported. China warned that additional tariffs on American medical equipment, chemical products, and energy products will follow, as The New York Times reported.

“Increased supply costs will apply additional fiscal pressures on hospitals' already strained budgets”

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


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