Medical Devices Exempted from Current Tariffs, as Requested by AAOS
On June 15, 2018, The United States Trade Representative removed $3 billion in medical devices from the list of Chinese technology imports subject to a 25% tariff. This action followed a letter from AAOS raising concerns with the negative consequences for patients and provider access to critical new medical technology. Read the letter here.
Last August, the United States Trade Representative (USTR) initiated a Section 301 investigation against China. Section 301 of the U.S. Trade Act of 1974 authorizes the President to take action against a foreign government that implements policies that violate international trade agreements or is deemed to be exercising unjustified, unreasonable or discriminatory restrictions on U.S. commerce.
A final report of the USTR’s investigation was released on March 22, 2018 and a list of products to be subjected to a 25 percent tariff was released on April 3, 2018. The tariff list was applied to 1,300 tariff lines worth around $50 billion in total on Chinese goods imported into the United States, including $3 billion in medical devices.
AAOS responded to the USTR invitation to submit comments on the proposed medical device tariff and submitted a letter on May 11th expressing concern and opposition to the tariffs proposed for medical devices.
“Our goal is to provide the best musculoskeletal quality patient care possible,” said AAOS President David Halsey in the letter to USTR, “and medical technology helps us achieve this goal. Many of the medical devices included in the USTR 301 list directly impact orthopaedics. Artificial joints, orthopaedic and fracture appliances, needles, sutures and surgical instruments used by our surgeons appear on the Section 301 list.”
On June 15th, President Trump announced he would move forward with 25 percent tariffs on Chinese technology imports, but the USTR removed most medical devices from the final list.
Imposition of a 25 percent tariff on medical devices could have a significant impact on cost for patients since a growing number of products, and their components, are now manufactured in China. The medical devices tariff was not mentioned in the original March investigation report.
China’s medical device industry has been expanding rapidly, with the fastest growth in sales of implantable orthopaedic devices, plates and screws made of titanium. Several companies, including Medtronic and Zimmer Biomet, have orthopaedic device factories located in China that export goods to the United States. A 25% tariff imposed on the importation of orthopaedic implants and other medical devices would have an adverse effect on medical device manufacturers and the physicians and patients who use these products by affecting availability and cost.