How US-China trade tensions are affecting the medical device industry

Alia Paavola - Print  | 

The medical device industry already has felt the sting of the trade war between the U.S. and China which may worsen if negotiations fail, according to Business Insider.

The industry is paying tariffs of up to 25 percent on $860 million in Chinese imports and nearly $5 billion in exports, according to AdvaMed, the medical device lobbying group.

While a small number of medical devices were exempted from the 25 percent tariffs in July, many were not, according to the Medical Device Network, a provider of medical technology news and analysis. 

Products affected by the 25 percent tariff include imaging equipment, diagnostic reagents used in X-ray exams and dental drills. The tariffs also affect the aluminium and steel used to make many medical devices.

President Donald Trump's administration said this week it plans to impose a tariff of at least 10 percent on nearly all Chinese imports beginning Sept. 1, but the president said that rate could be raised to as much as 25 percent on the $300 billion in Chinese imports that haven't been affected by the trade war, according to Business Insider. An expansion of imports subject to the tariff would add even more medical devices to the list.

The  trade war has been particularly hard on device manufacturers with supply chains between U.S. and China because they are hit with huge tax bills, according to Medical Device Network.

"It is quite common that products will be imported from a manufacturer in China to their manufacturing facility in the U.S., where they are substantially transformed by and re-exported – often to China. Taxing these products on both ends of the supply chain [is] a disincentive to manufacture in the U.S.," Patrick Hope, director of the Medical Imaging & Technology Alliance, told Medical Device Network.

Medical device suppliers also may be affected if China retaliates and increases tariffs on U.S. imports, Business Insider reported. Currently, the U.S. makes up more than 30 percent of China's medical device and diagnostics imports.

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