The global economy is being adversely affected by the trade war between the United States and China. However, specific industries have a higher stake in the war. The medical device industry, for example, is already experiencing the fallout of the war and analysts have predicted that things will get worse in the coming months.
Medical Device Industry Suffers Fallout of Trade War
According to research by AdvaMed, the medical device industry is currently paying 25% in tariffs for $860 million worth of Chinese imports. It is also spending $5 billion on exports. Last month, after months of negotiations, a few devices were exempted from the 25% tariffs but there wasn’t any significant change. The products that have been affected are major products like imaging equipment, steel, and aluminum for making medical devices and diagnostic reagents.
Right now, there is evidence that the trade war is only going to escalate. From the first of September, about $300 billion worth of Chinese goods that haven’t had tariffs will have a 10% tariff. Trump said that while the tariffs will start at 10%, it will most likely move as high as 25% eventually. More medical devices will be added to the new list.
While all medical device manufacturers are suffering, those who have direct supply chains between China and the United States are suffering the most. Many of these device manufacturers send products from China to the United States and back to China or vice versa. Now, they have to pay tariffs on both ends. To make up for the expenses, these manufacturers will have no choice but to increase the price of products. This is a move that will affect end users.
If China decides to increase tariffs on U.S imports as retaliation, the situation will worsen as the United States accounts for over 30% of all the medical device imports in China.