The medical device industry remains worried about the ongoing impact of Donald Trump’s trade war with China despite recent U.S. Trade Representative decisions to exempt products from tariffs on China.
The Advanced Medical Technology Association (AdvaMed) has successfully pushed for some products to be excluded from tariffs on Chinese medical products and devices once they enter the U.S. AdvaMed represents some of the world’s biggest device makers including Abbott Laboratories, Johnson & Johnson, GE Healthcare, Siemens and Stryker.
Just last week, the U.S. Trade Representative (USTR) Friday unveiled three lists of products exempted from tariffs on China and medtech-related products were on two out of the three lists. Some of the exempted products listed included anesthesia masks, certain component parts used to make magnetic resonance imaging (MRI) and X-ray equipment, according to the USTR and the federal register.
Still, medical device makers say there is impact to the industry and the threat of more tariffs to come in an ongoing trade war with China is troubling, hitting various parts of the medtech industry.
“It’s not optimal obviously,” AdvaMed CEO Scott Whitaker said Monday of the ongoing trade war during a press briefing. “Depending on the sector you are in and depending on the way your company is organized . . . the threat of that hanging over the industry is not helpful.”
Much of the impact of President Trump’s tariffs have been placed on component parts made in China that are used to make medical devices, AdvaMed member companies say. Thus, the impact hasn’t been as direct on imports device makers here need.
“It’s components that we bring in from China and we further finish around the world,” Kevin Lobo, CEO of Stryker who is current board chair of AdvaMed said during Monday’s briefing. “It’s base materials coming out of China.”
Over the summer of 2018, China began retaliating to counter moves by the Trump White House to level 25% tariffs on Chinese imports, first slapping tariffs on $1.125 billion in U.S.-made medical devices. But another round of retaliatory Chinese tariffs in September of last year responding to Trump tariffs on Chinese imports brought the total leveled against U.S. medical technology products to more than $4 billion at that time.
So far, big medical device makers say the hits to their products haven’t been “material” to their earnings given most of the large companies impacted generate billions of dollars in sales from around the world.
Some medical device makers attending the annual AdvaMed MedTech Conference this week in Boston say they are hopeful the trade war will subside in 2020, an election year. In the meantime, the industry is stepping up its efforts to protect companies and their products.
“AdvaMed is engaged with USTR regarding the U.S.-China trade talks,” Ralph Ives, who is AdvaMed’s executive vice president, global strategy and analysis, said in a statement provided by the association.
“We will continue to work with officials in Washington and Beijing to make sure our views are known,” Ives added. “AdvaMed strongly opposes tariffs by both sides on medical technology products that help save and improve millions of lives every day. We remain hopeful for a successful conclusion of the negotiations, which are delicate and with broad-reaching implications that our industry is watching closely on behalf of the patients we serve.”