America needs to be prepared for the next health crisis
WASHINGTON — The Coalition for a Prosperous America (CPA) urged the U.S. Trade Representative (USTR) Katherine Tai to reimpose tariffs on imports of personal protective equipment (PPE). Specifically, CPA opposes the continuation of COVID-related exclusions for 81 medical care products. In a submission to Ambassador Tai, CPA noted that the federal Public Health Emergency for COVID-19 will expire on May 11, 2023, four days prior to the expiration of the current China tariff waivers. As such, any consideration of continuing tariff waivers for Made-in-China medical products should be disqualified automatically.Tariffs are a critical tool to incentivize businesses to invest for the long term in domestic production of PPE.
“America’s manufacturers came together during COVID to rapidly and successfully ramp up production of healthcare equipment,” said CPA Chair Zach Mottl. “However, many of the Section 301 China tariffs were also waived at the same time, undercutting incentives to invest in domestic production. Now that the emergency declared under the Public Health Service Act is expiring, there’s no need to keep waiving the tariffs. Continuing the tariff exclusions would only benefit foreign manufacturers in adversarial nations like China while telling U.S. producers the government is not really interested in building production here.”
The Section 301 tariffs on Chinese imports that were waived during COVID have proven critical in addressing predatory trade practices, including forced technology transfer, intellectual property theft, and hacking. Since their imposition in 2018, the tariffs have helped to slow China’s capture of U.S. domestic market share. They’ve also boosted U.S. supply chain resiliency by encouraging sourcing from producers outside of China. In fact, during China’s ‘Zero Covid’ lockdowns, the U.S. economy was more resilient specifically because the Section 301 tariffs had initiated this process.
Conversely, further tariff waivers would undermine the goals set by both Congress and the Biden administration in the November 2021 Infrastructure Investment and Jobs Act. That legislation was specifically passed to encourage reshoring of domestic industry, including U.S. PPE manufacturing of surgical masks, air filters, face shields, protective eyewear, and surgical gowns.
However, importers of Made-in-China PPE are hoping to continue the tariff exclusions. USTR has already received 97 requests for continued exclusions—a clear sign that importers hope to maintain their profits from sourcing from China. The tariff waivers have allowed China’s heavily subsidized vendors to continue their dominance in the U.S. PPE market.
“The Biden administration knows the importance of domestically made PPE and other critical health care products, which is why they should end the exclusion of tariffs,” said Michael Stumo, CEO of the CPA. “CPA members need to know they will have a return on investment for investing in production of PPE without being undercut by subsidized foreign competitors who pay low wages and have little regulation. Tariffs have spurred investment in many sectors, and need to be employed with PPE so we are not without supplies when the next health crisis hits.”
Read CPA’s full submission to USTR here.