Med­i­cal de­vice mak­ers face steep tar­iff losses

China Daily (USA) - - ACROSS AMERICA - By ZHANG RUINAN in New York ru­inanzhang@chi­nadai­lyusa. com

US med­i­cal de­vice mak­ers could lose $138 mil­lion this year as the re­sult of the 25 per­cent US tar­iffs on Chi­nese im­ported goods that went into ef­fect last week, which might cause some man­u­fac­tur­ers to down­size and cut re­search and de­vel­op­ment.

“We es­ti­mate that the im­po­si­tion of ad­di­tional 25 per­cent du­ties will im­pact ap­prox­i­mately $836 mil­lion worth of med­i­cal tech­nol­ogy en­ter­ing the US from China, in­clud­ing re­lated com­po­nent parts and man­u­fac­tur­ing ma­te­ri­als,” Ralph Ives, ex­ec­u­tive vice-pres­i­dent of Ad­vaMed, a trade as­so­ci­a­tion in Wash­ing­ton, said on Fri­day.

The prod­ucts af­fected by the tar­iffs in­clude pace­mak­ers, elec­tro­car­dio­graphs, ul­tra­sound ma­chines, mag­netic res­o­nance im­agers, com­puter to­mog­ra­phy (CT) and X-ray scan­ners.

“These tar­iffs on imag­ing prod­ucts or their com­po­nents will harm the Amer­i­can med­i­cal tech­nol­ogy sec­tor’s abil­ity to stay com­pet­i­tive and will ad­versely af­fect the US econ­omy in ways that could com­pro­mise pa­tient ac­cess to care,” said Pa­trick Hope, ex­ec­u­tive di­rec­tor of the Med­i­cal Imag­ing and Tech­nol­ogy Al­liance (MITA).

“The tar­iffs are es­ti­mated to cost Amer­i­can de­vice mak­ers more than $138 mil­lion this year. CT scan­ners and other X-ray de­vice com­po­nents, in par­tic­u­lar, would be most sig­nif­i­cantly af­fected, ac­cord­ing to the sur­vey re­sults,” Hope added.

A sur­vey con­ducted by MITA in May of a ma­jor­ity of US med­i­cal imag­ing in­dus­try mem­bers showed that 100 per­cent of man­u­fac­tur­ers said they would in­vest fewer re­sources in re­search and de­vel­op­ment and 100 per­cent said they would re­duce work­force if the tar­iffs were put into ef­fect.

“One com­menter said, ‘The pro­posed tar­iffs on health care tech­nol­ogy would harm US man­u­fac­tur­ing com­pet­i­tive­ness glob­ally and de­crease US ex­ports, in­clud­ing, iron­i­cally, US ex­ports to China,’” Hope said.

“An­other said, ‘A new tax would re­quire this small com­pany to lay off em­ploy­ees and also sig­nif­i­cantly raise the cost of health­care as man­u­fac­tur­ers will have to ei­ther cut R&D or pass on the 25 per­cent in­crease to the end users (health­care providers)’,” Hope con­tin­ued.

He also men­tioned that the is­sue of in­ter­com­pany trans­fers not­ing that many prod­ucts are im­ported from a man­u­fac­turer in China to a man­u­fac­tur­ing fa­cil­ity in the US, where they are sub­stan­tially trans­formed and then re-ex­ported — of­ten back to China.

“Tax­ing these prod­ucts on both ends of one com­pany’s sup­ply chain could cre­ate a dis­in­cen­tive for com­pa­nies to man­u­fac­ture in the US,” he said.

Karan Bhati, pres­i­dent of govern­ment af­fairs at Gen­eral Elec­tric said in a state­ment: “While the vast ma­jor­ity of the parts that GE Health­care uses in our US plants are made in the United States, GE also im­ports cer­tain MRI ma­chine parts — which con­tain high lev­els of US content — from our wholly owned GE fac­to­ries in China.”

GE’s health­care busi­ness em­ploys 6,000 work­ers at its Wis­con­sin fa­cil­i­ties, pro­duc­ing high-tech med­i­cal equip­ment, such as MRI ma­chines.

“We think it is clear that plac­ing tar­iffs on prod­ucts made in a US-owned plant would gen­er­ate no mean­ing­ful ne­go­ti­at­ing lever­age with the Chi­nese govern­ment,” Bhati said.

“The med­i­cal de­vice is a vi­tal ex­port for the US,” said Grace Fu Palma, CEO of China Med De­vice, a so­lu­tion provider for US med­i­cal de­vice com­pa­nies to en­ter China. “Med­i­cal tech­nol­ogy firms in the US cur­rently sell about $6.6 bil­lion an­nu­ally to China, while the US im­ports from China a to­tal of $5 bil­lion in med­i­cal de­vices.”

Med­i­cal de­vices ranked fourth af­ter soy­beans, air­craft and au­tos among all goods the US ex­ported to China last year.

Al­though China has not in­cluded any med­i­cal de­vices in the first list of re­tal­ia­tory tar­iffs, many US com­pa­nies are wor­ried about a more se­vere Chi­nese re­tal­i­a­tion.

“About 25 per­cent of (GE MRI ma­chines) are ex­ported around the world, in­clud­ing to a grow­ing mar­ket in China. In to­tal, GE Health­care ex­ports $1.8 bil­lion of com­plex med­i­cal equip­ment to cus­tomers around the world,” Bha­tia said.

“Though China has im­ple­mented its first list of re­tal­ia­tory tar­iffs to­day on $34 bil­lion worth of US ex­ports to China, this list does not in­clude med­i­cal tech­nol­ogy de­vices. Ad­vaMed strongly op­poses tar­iffs on med­i­cal tech­nol­ogy by both sides,” Ives said.

These tar­iffs ... will harm the Amer­i­can med­i­cal tech­nol­ogy sec­tor’s abil­ity to stay com­pet­i­tive ... ” Pa­trick Hope, ex­ec­u­tive di­rec­tor, Med­i­cal Imag­ing and Tech­nol­ogy Al­liance


A hor­i­zon­tal MRI scan­ner in a hos­pi­tal in New York state.

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