Washington debates cutting tariffs to aid pandemic battle

As U.S. manufacturers retool to rapidly boost production of medical equipment to fight COVID-19, a debate is brewing in Washington over whether to lift tariffs on Chinese imports, including some plastic products, to help in that fight.

Some want President Donald Trump's administration to temporarily halt tariffs on a wide range of medical products, including Chinese-made plastic face shields and medical gowns, plastics used in 3D printing, injection molds for medical products and resins used in health care applications.

They say it would lower costs and help to ease persistent shortages of medical products.

But others are pushing back, saying that in some cases tariffs should be kept because there's enough U.S. and regional capacity to meet surging health care needs. And they say keeping the tariffs will help the president's goal of building up U.S. industry and trying to reshore manufacturing.

The push to lift tariffs is coming from groups like the American Chemistry Council, which told U.S. trade officials that they should temporarily suspend tariffs on a range of plastics and chemicals, including polycarbonate used in medical devices and syringes, PVC in tubing and IV bags and polypropylene in masks, gowns and goggles.

ACC President and CEO Chris Jahn noted shortages of key medical equipment needed by health care workers in an April 29 letter asking U.S. Trade Representative Robert Lighthizer to suspend China tariffs that USTR and President Trump have aggressively supported.

"Eliminating additional tariffs … on these chemical and plastic inputs is one of the quickest, most straight-forward approaches to cutting the costs to making high-demand products in the United States," Jahn said. "Despite the best efforts of businesses around the country, health care workers, consumers and workers in essential industries are in dire need of products and equipment that can help save lives."

Congress is also weighing in.

Rep. Richard Neal, D-Mass., chairman of the powerful Ways and Means Committee, on May 4 called on the Trump administration to suspend all tariffs, including China tariffs, for 90 days on more than 100 categories of medical imports needed to fight the pandemic.

He called it an emergency measure to overcome persistent shortages but also said it needed to be paired with long-term efforts to boost domestic production of medical goods, using the Defense Production Act and other tools.

Some argued against tariff suspensions.

Materials supplier Milliken & Co. urged Washington to keep tariffs on some specific Chinese materials used to make personal protective equipment, painting it as part of a broader effort to strengthen U.S. manufacturing.

It noted it's an "essential company" under U.S. rules and said it and other companies are ramping up production in the region to support medical production.

"These unnecessary tariff concessions would benefit an importer at the direct expense of American manufacturers on the front lines of the COVID-19 response," Executive Vice President W. Chad McAllister wrote to Lighthizer April 30.

"Members of this administration — including [senior Trump trade aide] Peter Navarro recently — pledged that the United States would move away from its reliance on the other nations for medical supplies and towards building up its own domestic supply chain," he said.

Milliken said supply chains in North America and Central America can meet the demand.

Some industry groups that include plastics firms, like the Coalition for a Prosperous America, have had similar messages in recent weeks, urging Washington to take stronger steps to boost U.S. manufacturing of medical products. The Washington Post reported April 30 that Navarro has been urging Trump to adopt an executive order requiring the federal government to buy U.S.-made medical supplies.

The business lobbying comes after the U.S. Trade Representative opened a formal review in late March on whether to suspend any China tariffs because of COVID-19. The China tariffs range from 7.5 to 25 percent.

As well, the U.S. International Trade Commission delivered a report to Neal and other lawmakers in early May detailing imports of key medical products needed in the pandemic.

Some large medical companies and business groups are urging USTR to suspend tariffs on several common items being made by plastics companies as they have retooled their factories in the last two months to fight COVID-19.

Cardinal Health, for example, asked for tariffs to be temporarily lifted on more than 40 medical consumables, including medical protective garments made from plastic sheeting or related synthetic fabrics, as well as plastic face shields.

Cardinal, which makes and distributes medical products and has 30,000 employees in the U.S., said many of the goods are low-margin products often made in China.

"These products are needed more than ever as they are in short supply as a result of COVID-19 and are adding additional stress to the U.S. health care system," the company said. "Placing tariffs on medical products is troubling from a public health perspective."

The Advanced Medical Technology Association asked USTR to eliminate tariffs on Chinese-made plastic parts used in making vaccines and blood donation systems for treatments, as well as for plastic face shields, among many requests it made.

It said it welcomed a recent USTR decision to suspend China tariffs on some PPE products but urged more. It said the Trump administration should suspend tariffs on all relevant China-made medical goods until at least one year after the World Health Organization declares the pandemic to be over.

"When foreign suppliers have a choice of where to ship, the cost of sending such products to U.S. patients should be competitive with other countries that do not impose Section 301 tariffs," AdvaMed said. "Inventories will need time to rebuild after COVID-19 has ended."

And the U.S. Chamber of Commerce asked for tariff exemptions on polystyrene, plastic hand pumps used in sanitizer containers and a few other plastics-related products, among many it listed.

It called on the Trump administration to work with the World Trade Organization to make trade in medical products and PPE tariff free for the duration of the pandemic.

Others were asking for very specific relief: MakerBot Industries LLC wanted tariffs suspended on specialized plastic materials used in 3D printing, saying shortages were hampering production of personal protective equipment.

As well, two companies asked for tariffs to be lifted on Chinese-made injection molds.

Diagnostic equipment maker Danaher Corp. asked for suspension of tariffs for a mold used to make cartridges in a high-profile product: a rapid COVID-19 test kit made by its Cepheid subsidiary.

Cepheid received emergency approval March 21 from the Food and Drug Administration to use that test, known as Xpert Xpress SARS-CoV-2. It can provide results in 45 minutes, compared to several days needed for other tests, Danaher said.

As well, a small mold importing firm in Attica, N.Y., PML Engineered Mold Solutions LLC, asked for mold tariffs to be suspended.

"There was a time when the USA had the capacity to manufacture these mold tools quickly, but many years of offshoring did away with that infrastructure and it cannot be replaced quickly," President Roger Reiner said. "The tooling sources in China are needed to keep the required volumes needed to combat COVID-19."

The American Mold Builders Association, however, has previously argued in other USTR filings supporting China tariffs that U.S. mold and die firms have capacity to fill orders.