U.S. Trade Officials Grant Tariff Relief for Face Masks, Medical Equipment

Date: Monday, March 9, 2020
Source: The Wall Street Journal

Exclusions are approved for 27 companies in light of coronavirus outbreak

WASHINGTON—The Trump administration has granted exclusions from import tariffs for more than 100 medical items imported from China, including face masks, examination gloves and sanitizing wipes.

The exclusions were approved for 27 companies, all of which filed their requests before a Jan. 31 deadline. The coronavirus outbreak was still largely centered in China at that time, but U.S. companies were already girding for a pandemic.

“There is currently a critical shortage of face masks that will likely have ramifications across the globe,” Medline Industries Inc. of Northfield, Ill., said in its filing for a tariff exclusion. “Medline is adding capacity as quickly as possible but in order to ensure public safety and health we must continue to maximize capacity at all available suppliers, both those inside and outside of China.”

Medline received 30 of the 103 exclusions granted. Its products receiving tariff waivers included face masks, surgical drapes, specimen containers and surgical gowns.

Other companies also received relief from the tariffs on operating-room-table covers, antimicrobial linens, identification wristbands, blood-pressure sleeves and stethoscope covers.

The office of the U.S. Trade Representative didn’t respond to a request for comment.

The USTR spared pharmaceuticals from its various tariff lists but put tariffs on a range of medical supplies, despite vociferous objections from medical-supply companies.

At a public hearing held by USTR in June, industry representatives testified about the risk of imposing tariffs on medical supplies.

Matthew Rowan, president of the Health Industry Distributors Association, which represents wholesalers supplying physicians’ offices, hospitals and nursing homes, testified that “health-care products are essential to the nation’s pandemic- and emergency-readiness capabilities.”

“The risks to health care and public health from tariffs outweigh any benefit to trade or economics,” he said.

The tariffs increase the costs of medical supplies at a time when some items are already in limited supply, exacerbating the medical system’s ability to be prepared to confront the pandemic.

The exclusions provide some economic relief to companies importing medical goods from China, but they won’t have any effect on supply chains, several company spokespeople said.

“This tariff piece is more of an economic piece within the supply chain,” said Ron Prybella, spokesman for Medegen Medical Products of Hauppauge, N.Y. The company received 16 exclusions for products including bags, masks and containers.

During the U.S.-China trade war that began in 2018, the Trump administration placed tariffs on over half of Chinese imports, imposing the new levies in four different tranches. The exclusions on Thursday were the first to be granted under the $120 billion fourth tranche of tariffs, which affects $120 billion in Chinese goods.

The fourth tranche, which included hundreds of medical items, was the final action scheduled by the U.S. in the trade war. Tariffs of 15% were imposed on these items in September. They were reduced to 7.5% in February following the signing of the phase-one trade agreement between the U.S. and China in January.

The USTR has been working through more than 52,000 tariff-exclusion requests, with more than 12,000 left to decide. Although it granted 35% of requests under the first two tranches of China tariffs, its approval rate under the third tranche, which consists of more consumer and assembled goods, is just 3%.

 

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