The tariff hikes, directed under Section 301 of the Trade Act of 1974, target strategic sectors. Much of the media coverage around Biden’s tariffs has focused on how they’re meant to prevent China from cornering the U.S. market for the green, climate-change-fighting technologies of the future, such as electric vehicles, solar panels and batteries. But medical products are part of the mix, too.
The Biden administration aims to bolster American industries to mitigate the impacts of what it describes as China’s market-distorting prices and policies.
Medical products will see tariff increases ranging from 7.5% to 50% in 2024. Tariff rates on syringes and needles will increase from 0% to 50% this year. Certain personal protective equipment (PPE), including certain respirators and face masks, will see tariff hikes from 0-7.5% to 25% this year. The White House also noted that tariffs on rubber medical and surgical gloves will increase from 7.5% to 25% in 2026.
According to a White House news release, these new measures aim to support more domestic manufacturing of medical products to ensure the availability of essential medical supplies. The Biden administration wants to support a “strong domestic industrial base” for some of the essential medical supplies during the COVID-19 pandemic response and continue to be used today for essential care.
“President Biden has consistently been clear that he will take action to defend American workers and businesses from the unfair trade practices of the People’s Republic of China,” U.S. Trade Representative Ambassador Katherine Tai said in a White House press conference. “President Biden and I both know that American workers and businesses can outcompete anyone as long as the competition is fair. But for too long, the PRC has been playing by a different set of rules with unfair and anticompetitive economic practices.”
Tai said that the federal government conducted a “statutory review” of China’s forced technology transfer and other intellectual property-related practices that were the subject of the 2018 Section 301 investigation. In those findings, Tai noted that China “continues to deploy these unfair trade practices.”
“It is clear that the previous administration’s trade deal with the PRC failed to increase American exports or boost manufacturing. In fact, China’s exports in some critical sectors, like EVs and batteries, actually increased,” Tai said.
The increased tariffs are expected to cover approximately $18 billion of trade. Biden also directed a process to request that certain production machinery be excluded from the tariffs, allowing solar and clean manufacturers to purchase equipment and diversify suppliers.
The Office of the U.S. Trade Representative will issue a public notice next week outlining the specific tariff lines, tariff rates and timing for the proposed increases and machinery exclusions.
The U.S. Trade Representative’s argument for tariff hikes
The Biden administration’s decision to impose tariffs on certain medical products stems from a report from the Office of the U.S. Trade Representative (USTR) highlighting concerns over technology transfer practices.
The report detailed significant indirect pressure on foreign companies to form joint ventures and partnerships with local Chinese companies, potentially jeopardizing intellectual property.
China’s “Made in China 2025” initiative identified “high-performance medical equipment” as a key industry in which it wanted to achieve 85% domestic market share of core medical device components by 2025. The USTR’s report said that up to 80% of medical devices sold in China are acquired through “government procurement,” which allows for enforcement of technology transfer requirements.
U.S.-China Business Council (USCBC), representing over 270 American companies, has documented these concerns. According to the USCBC, some healthcare equipment suppliers have considered using China’s Market Authorization Holder system to maintain public procurement customers while avoiding technology transfer. However, this model still poses technology transfer risks.
The European Chamber’s 2020 Business Confidence Survey indicates a growing concern among foreign medical device companies – 30% of respondents felt compelled to transfer technology to maintain market access.
The USTR’s report concludes that foreign medical device companies will continue to face pressure to transfer their technology as long as China’s industrial policies target the sector and procurement regulations enforce technology transfer requirements.
Medtech heeds FDA warnings about Chinese-made devices
According to the White House statement, the federal government and the private sector have made substantial investments to build domestic manufacturing for the medical products affected by the tariffs. However, businesses are reportedly struggling to compete with Chinese-made supplies.
“American businesses are now struggling to compete with underpriced Chinese-made supplies dumped on the market, sometimes of such poor quality that they may raise safety concerns for health care workers and patients,” the White House said in a press release.
MassDevice has reported a slew of medtech recalls related to devices manufactured in China. In November 2023, the FDA warned about potential device failures with plastic syringes manufactured in China. Some of the failures could include leaks, breakage and other problems. At the time, the agency said it received information about quality issues associated with several Chinese syringe manufacturers.
In March, the FDA issued a warning letter to Medline over its plastic syringes. The warning described violations related to the sale and distribution of unauthorized plastic syringes made in China that were not cleared or approved by the FDA for sale or distribution in the U.S. The warning letter identified violations related to quality system regulations for syringe products.
Philips also received an FDA warning letter in April over imaging systems manufactured in China. During an inspection of a manufacturing facility in Suzhou, China, the FDA determined that the devices are “adultered.” The letter outlined violations in manufacturing the computed tomography (CT) systems. The devices are adultered in that the methods used in, or the facilities or controls used for their manufacture, storage or installation do not conform with current good manufacturing practices, the FDA said.
However, some companies have responded to the FDA warning letter. BD announced in March that it would increase its U.S. syringe production to ensure continuity of patient care. It increased manufacturing at its Nebraska and Connecticut facilities.
How the tariffs stack up to the 2018 tariffs
This isn’t the first time medtech has faced a series of tariffs. In July 2018, the former Trump administration placed nearly $1 billion in duties on the medical device industry. The tariffs were part of a larger plan to impose tariffs on $50 billion worth of Chinese imports as part of a plan to keep American companies from manufacturing their technology in China and transferring intellectual property to domestic Chinese enterprises.
At the time, the proposed list of products facing the tariff included 1,300 separate tariff lines. A total 30 finished medical devices were listed on the proposed tariff list. Products including needles, catheters, defibrillators, X-Rays, patient monitoring systems, respiration devices and more received increased import taxes.
China proposed its own $50 billion tariff plan in 2018 as well, but listed only 106 products on its tariff lines. Most of the products it listed were related to agricultural products, but also included auto, chemical and airplane products. Its proposed tariffs had no direct effects on medical device companies.
