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By: Henry T. Chou, Esq.
In early April 2018, the Trump administration announced that it would place a 25% tariff on more than 1,300 products imported from China that include items used in the robotics, information technology, communication technology and aerospace industries. What is not widely known, however, is the fact that dozens of drugs and medical devices are among the Chinese products and ingredients that the Trump administration targeted for the 25% tariff. Under the administration’s proposal, defibrillators, pacemakers, artificial joints, dental fillings, birth-control pills, vaccines, insulin, epinephrine and lidocaine are among the many items targeted by the tariff.
The U.S. medical device industry has expressed concern because many of its member companies own and operate factories in China that manufacture products that are sold in the U.S. Manufacturing activities in China have boomed in recent years, resulting in a situation where 12% of all medical devices imported into the U.S., worth $3 billion per year, are made in China. Analysts have estimated that the proposed tariff could cost the U.S. medical device industry up to $1.5 billion each year, with the increased costs ultimately being passed down to consumers.
The generic pharmaceutical industry is also bracing for the effects of the tariff, given that China is a leading exporter of raw pharmaceutical ingredients. Of particular concern are generic injectable drugs, which are already in short supply due to existing manufacturing and supply issues. Two drugs on the list of Chinese exports subject to the proposed tariff are epinephrine and lidocaine, both of which are in short supply in their sterile injectable form. Additionally, since the raw ingredients for generic injectable drugs made in the U.S. are mostly sourced from abroad, the full extent of the tariff’s impacts may not be known for some time.
The list of items subject to the proposed tariff can be viewed at https://ustr.gov/sites/default/files/files/Press/Releases/301FRN.pdf. There is still time to act if a product that you import appears on this list, as companies have until May 22 to submit comments to the administration regarding the tariff. Hill Wallack LLP stands ready to assist its clients in minimizing the effects of the proposed tariff.