Stock markets the world over slipped today after the Trump Administration pulled the trigger on $50 billion in tariffs against China, including medical devices made in the People’s Republic that could put a $5 billion hit on the U.S. medtech industry.
The new tariffs impose an extra 25% duty on Chinese imports with “industrially significant” technologies, according to the office of U.S. Trade Representative Robert Lighthizer, which claimed that an “exhaustive” investigation found that “China’s acts, policies and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory, and burden U.S. commerce.”
The Chinese government immediately threatened to counter with an equivalent amount of tariffs on U.S. exports there.
“We will immediately launch tariff measures that will match the scale and intensity of those launched by the United States,” China’s Commerce Ministry said, according to CNN, adding that “all economic and trade agreements reached by previous negotiations will be nullified at the same time.”
The U.S. tariffs, covering some 1,100 products, cover two sets of products. The extra duties on 818 products worth about $43 billion go into effect July 6; the second set of 284, worth $16 billion, “will undergo further review in a public notice and comment process, including a public hearing,” the USTR office said.
Included in the first batch of tariffs are a variety of medical devices and components, including pacemakers; electrocardiographs; ultrasound, MRI, CT and X-ray scanners; patient monitoring equipment; optical and anesthetic instruments; and alpha, beta, gamma and ion-beam radiation equipment.
Medical device industry representatives lobbied against the tariffs, which could affect about $5 billion in U.S. medtech products, according to AdvaMed public affairs EVP Greg Crist.
Industry leaders are “surprised and disappointed,” Crist said.
“It’s also fair to say manufacturers are disappointed because this action threatens to affect the health and well-being of American patients and those around the world,” he said, noting that the $5 billion price tag could move higher if circuit boards and other components are included in the tariffs.
“U.S. medical device companies have benefitted from setting up factories in China,” noted China Med Device CEO Grace Palma. “With five times the U.S. population and low healthcare standards, as well as a very under-developed medtech industry, most of the large U.S. companies have benefitted from setting up local factories to reduce cost and provide easier access to local populations.”
China’s proposed tariffs did not include medical devices, Palma said back in April.
Investors around the globe reacted negatively to news of the trade war, with the FTSE 100 in London down -1.7% to 7633.91 and the European Equity Fund down -0.6% at 9.62.
In the U.S., the S&P 500 slid -0.3% to 2,773.54, the Dow 30 was off -0.8% to 24,963.05 and the NASDAQ index down -0.2% to 7,743.62.