WSJ opinion:  Trump’s Tariffs Leave the U.S. Short on Vital Medical Supplies.

Trump's Tariffs Leave the U.S. Short on Vital Medical Supplies

From gloves to respirators, protectionism is raising costs for the providers fighting the coronavirus.

Why would the U.S. in­crease the cost and dif­fi­culty of sup­ply­ing pro­tec­tive gear to doc­tors and nurses? Why would Wash­ing­ton ob­struct the ac­qui­si­tion of life­sav­ing equip­ment? Be­cause the scle­ro­sis of trade pro­tec­tion-ism, once it takes hold, con­stricts eco­nomic health and adap­ta­tion.

Chad Bown of the Pe­ter-son In­sti­tute for In­ternational Eco­nomics cal­cu­lates that the Trump ad­min­is­tra­tion has im­posed new taxes on al­most $5 bil­lion of med­ical ex­ports from China, to­tal­ing about 26% of U.S. health-care im­ports. With tar­iffs, the U.S. gov­ern­ment is mak­ing it harder for first re­spon­ders to pro­cure masks, ster­ile gloves, gog­gles, hos­pi­tal gowns, sur­gi­cal drapes, ther­mome-ters and breath­ing masks. Amer­ica also im­ports about $22 bil­lion of med­ical tech­nol-ogy from coun­tries all over the world, in­clud­ing CT sys­tems, pa­tient mon­i­tors and X-ray de­vices.

U.S. med­ical dis­trib­u­tors are busy hunt­ing for al­ter­na-tive pro­duc­ers and test­ing their equip­ment for in­ter­op­er-abil­ity when they should be con­cen­trat­ing on get­ting sup­plies to those in need. China, in turn, has di­verted its sales to other mar­kets. Af­ter Pres­i­dent Trump hit Chi­nese med­ical sup­pli­ers with a 25% tar­iff in 2018, Chi­na's ex­ports to the U.S. dropped by 16%. In some cases, Amer­i­can users had no good al­ter­na­tives be­cause sup­pli­ers must get cer­ti­fied by the Food and Drug Ad­min­is­tra­tion, which can take more than two years. U.S. med­ical-equip­ment pro­duc­ers have also been plagued by the pres­i­dent's new tar­iffs on im­ported com­po­nents.

Mex­ico ranks sec­ond to China in sup­ply­ing pro­tec­tive med­ical equip­ment to the U.S. But Mr. Trump's er­ratic threats have helped un­der-mine con­fi­dence in build­ing that coun­try's in­dus­tries for ex­port.

The ad­min­is­tra­tion re-cently of­fered an in­dict­ment of its own eco­nomic iso­la­tion-ism. It qui­etly—and only tem­porarily—re­duced tar­iffs on a smat­ter­ing of Chi­nese med­ical prod­ucts. Such half-mea­sures fall far short. If Chi­nese ex­porters face mul­ti­ple de­mands, they will pri­or­i­tize coun­tries with­out tar­iffs or time-lim­ited tar­iff sus­pen­sions.

Two re­searchers at the World Bank, Aa­ditya Mat­too and Michele Ruta, have iden­ti­fied an­other trade prob­lem the U.S. has over-looked. By March 11, two dozen economies had re-stricted ex­ports of med­ical sup­plies, in­clud­ing Ger­many, France, South Ko­rea and Tai­wan. Mr. Trump's mis­statement about shut­ting down trade with Eu­rope caused anx­i­ety among U.S. providers be­cause the Eu­ropean Union is now the pri­mary for­eign sup­plier of Amer­i­ca's CT sys­tems, hand san­i­tizer, pa­tient mon­i­tors and pulse oxime­ters, X-ray ma­chines and breath­ing masks. A mere seven coun­tries ac­count for 70% of the ex­ports of ar­ti­fi­cial res­pi­ra­tors, vi­tal tools for the se­ri­ously ill; if one of them banned ex­ports, prices could in­crease by up to 10%.

There's a les­son in the world-wide surge of food prices from 2008-11—over-looked in nearly every ret­ro-spec­tive analy­sis of the fi­nan­cial cri­sis. As pres­i­dent of the World Bank at that time, I worked with the World Trade Or­ga­ni­za­tion to limit re­stric­tions on agri­cul­tural ex­ports. Nev­er­the­less, re­cent World Bank re­search shows that ex­port lim­its pushed up global food prices by an av­er­age of 13% over that pe­riod, and 45% for rice.

Crises cry out for in-ternational lead­er­ship. In the post­war era, Amer­i­can of­fi­cials rec­on­ciled global good sense with U.S. self-in­ter­est. The Trump ad­min­is-tra­tion should elim­i­nate all U.S. tar­iffs on med­ical prod-ucts to re­duce the cost of the pan­demic re­sponse, and it should urge other coun­tries to do the same. Forty-six de­vel­oping economies im­pose tar­iffs of 5% to 25% on res­pi­ra­tors. The U.S. should rally part­ners in the Group of 20 to ban re­stric­tions on ex­ports of med­ical prod­ucts re­lated to Covid-19 so that the world avoids price spikes, pre­vents pan­ics, gains ben­e­fits of scale and spe­cial­ized pro­duc­tion, pre­serves va­ri­ety of sourc­ing—and saves lives.

In ad­di­tion to cop­ing with a pan­demic, Amer­i­cans face a new de­bate about the coun-try's role in the world. Some are us­ing the pan­demic to ar­gue for greater iso­la­tion. That coun­sel of re­treat failed mis­er­ably to counter the Great De­pres­sion in the 1930s and the se­cu­rity threats of 1941. As re­cently as the 2008 cri­sis, Amer­i­cans learned again that they couldn't wall them­selves off from the world.

The U.S. will need to di­ver­sify sources of key sup­plies, and com­pa­nies will need to build sup­ply chains that are more flex­i­ble and re­silient. Na­tions and busi-nesses should con­sider pru­dent in­ven­to­ries and stock­piles. But pre­cau­tions shouldn't de­grade into costly, self-de­feat­ing il­lu­sions of au­tarky. Ex­port bans and tar­iffs on med­ical goods in­crease costs, cre­ate short-ages and make Amer­i­cans less safe. If other coun­tries em­brace these sorts of trade re­stric­tions, ma­jor U.S. ex­porters, in­clud­ing farm­ers, will be dev­as­tated.

Mod­ern chal­lenges—viruses, eco­nomic dis­rup­tions, the en­vi­ron­ment, cy­ber­se­cu-rity, food sup­plies and more—re­quire eco­nomic pow­ers to act in con­cert, even as they pur­sue their own na­tional in­ter­ests. Last year the Health In­dus­try Dis­trib­u­tors As­so­ci­a-tion warned pre­sciently that Mr. Trump's med­ical tar­iffs "put a risk to our na­tion's pub­lic health pre­pared­ness." Amer­i­cans are now pay­ing the price for the pres­i­dent's fail­ure to rec­og­nize that his trade wars and walls would back­fire.

Robert B. Zoel­lick is a for­mer World Bank pres­i­dent, U.S. trade rep­re­sen­ta­tive and deputy sec­re­tary of state. He published this commentary in the Wall Street Journal on March 18, 2020


March 21, 2020


Voices4America Post Script. This is what happens when a stupid bully meets radical right ideology. Trump's 25% tariffs on Chinese medical exports leave our hospitals without equipment. #TrumpTariffsPeopleDie #WorstPresident Ever #RemoveTrump2020

This is another failure in competence by the #LiarInChief.

Here are Senator Charles Schumer and Senator Tammy Duckworth's responses.

Here are some other things Trump should have done, but doesn't, even now.

Show Comments ()


Follow Us On


On Social