Tariffs will increase medical supply chain costs by $160M, hospitals warn

Date: Thursday, November 15, 2018
Source: Supply Chain Dive

Dive Brief:

  • Tariffs on Chinese imports will cause a $160 million rise in hospital supply chain costs next year, according to an estimate from the American Hospital Association (AHA). The estimate was delivered to U.S. Secretary of Commerce Wilbur Ross in a letter intended "to strongly oppose the tariffs that have been imposed on medical equipment and medical products imported from China that are used in hospitals, as well as potential tariffs under consideration that would impact the health care field."
  • In the letter, AHA executive vice president Thomas P. Nickels warns healthcare costs for consumers will rise as result of the increased materials costs.
  • A July American Action Forum analysis puts the value of medical imports affected by the tariffs at $1.8 million.

Dive Insight:

The impact of the China tariffs, once somewhat ignored as political positioning, has begun to impact many aspects of the supply chain. But while commercial buyers may still be trying to sort out the influence of tariffs on their commodity buys, the consumer supply chain is beginning to see the threat of higher prices.

Consumers are also beginning to understand they live squarely in the middle of a global supply chain, surprised at where some of their products actually come from.

The owner of a large regional furniture chain in my local market has filmed commercials where he calmly explained the cost of furniture is going up due to the tariffs, and yes, some of the furniture that he sells comes from China. But he also explained the furniture brands built in the United States may contain raw materials like steel and aluminum, imported from China and subject to tariffs, making those products more expensive as well.

This owner was recently interviewed on the television news, subtly being accused of using the threat of upcoming tariffs to drive holiday sales, but he held steadfast, saying the consumer needs to understand the impact of political and economic decisions on their own budgets. 

Furniture and cars aside, the impact on the medical supply chain will be felt by hospitals, healthcare providers, insurance companies and patients alike. And while the average patient may not see an immediate change to their co-pay, the tissues, bandages, and vitamins purchased at their local pharmacy will likely cost more due to tariffs. And we can be certain medical insurance companies are keeping a keen eye on costs … and future insurance rates.

Far too many professionals in the supply chain dismiss or ignore macro-economic policies such as tariffs. Sure, they may see changes to their bill of material costing, but in most cases the customers at the end of the supply chain will pay for them. Its when those same tariffs come full circle and impact their family budgets, that the reality of the collision of politics and economics becomes real.  

Read more the original source.

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