Tariffs: Is Mexico the next China?

Eugene Ramirez | January 2020

Could Mexico be next? The medical device industry is keeping a close eye on the relationship between the United States and its immediate neighbor to the south. The countries reached a deal to indefinitely suspend proposed tariffs after the U.S. announced earlier this year that it would impose a 5% tariff, eventually set to rise to 25%, on all imports from Mexico,
including medical devices. The United States relies on Mexico for 17% of its medical device imports. It could potentially be devastating to the medical device industry and, ultimately, to patients.

The trade battle between the United States and China that started when the U.S. levied tariffs on $34 billion worth of Chinese goods in July of 2019 has already demonstrated what could happen. As a result of the discord between the world’s two greatest economies, the medical device industry is facing tariff rates of up to 25% on both $860 million in Chinese imports to the US and nearly $5 billion in exports to China per AdvaMed, a medical device lobbying group. Pacemakers, MRI and X-Ray machines, anesthetic devices and optical instruments made in China are among the many medical devices subject to the tariffs, which oftentimes end up being passed down to patients. As reported by MassDevice.com, some surgical, radiotherapy and dental devices are exempt.

Even the smallest medical device companies are facing hundreds of thousands of dollars in tariffs as a result of the trade war with China.  A recent report by Politico explains how appealing the tariffs could take months and not always have the
desired result.

Whether Mexico is next could depend on how well they live up to their side of the bargain. In exchange for suspending the proposed tariffs, Mexico agreed to help stop the flow of migrants crossing the border in the United States.

Read more about tariffs on medical devices in this FIME report.