US tariffs on China may cost its battle for the coronavirus

US tariffs on China may cost its battle for the coronavirus

Aside from the recent implementation of the Defense Protection Act, it seems the U.S. is faced with another obstacle. Its imposed tariffs on China, particularly on imported medical equipment, has added tensions to fight the pandemic.

In a news report from the World Trade Organization (WTO) published last April 3, it is said that the U.S. is one of the top 3 suppliers of medical products, as well as exporters of personal protective equipment (PPE).

In addition, China leads as the top exporter of PPE, while Germany leads as the top exporter of medical products.

Analysts divided to lift tariffs; some say China might ‘take advantage’

In an article from the New York Times, it is said that politicians and business groups are torn on what to do about U.S. President Donald Trump’s tariffs.

According to supporters, lifting the tariffs, even temporarily, would be a simple and immediate way to assist businesses and consumers coping with higher costs from Trump’s levies.

COVID-19 tariffs

An earlier report at Peterson Institute for International Economics (PIIE) written by Chad Bown suggests that Trump’s tariffs on Chinese medical products might be contributing to shortages and higher costs of vital equipment.

The American Apparel and Footwear Association, the National Retail Federation, and other trade groups wrote a letter to the White House last March 13 requesting immediate elimination of tariffs on China and the subsequent refund of duties as the letter reads:

“We can think of no other policy tool at the administration’s disposal that would have such a fast and beneficial impact as the immediate and retroactive removal of these tariffs […] Such a move would instantly put billions of dollars back into the U.S. economy.”

As far as steel and aluminum are concerned, Thomas M. Conway, the international president of the United Steelworkers Union, warned against removing tariffs on steel.

This move could also harm an industry that is already struggling as a result of auto plant closures and a general slowdown in manufacturing.

COVID-19 tariffs

Medical product providers already cautioned against tariffs

These providers have already warned the U.S. as early as 2018 and 2019 against tariffs on medical supplies, as it would lead to higher costs and disruption of supply chains.

Robert Zoellick, former president of the World Bank and former U.S. deputy secretary of state, cautions U.S. trade actions, as he says:

“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%”

Zoellick also adds that Trump’s erratic threats have helped “undermine confidence in building that country’s industries for export.”

After Trump’s enactment of the Defense Production Act, Huang from the Council on Foreign relations adds:

“This is a global pandemic. Our ultimate success in containing the spread of Covid-19 is to a large extent dependent upon how effective other countries are dealing with the outbreak. We cannot claim victory unless other countries are virus-free.”

Banning PPE exports would increase tensions in other countries who are in need of the equipment as they battle their way in fighting COVID-19.

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