As of January 17, 2019, the Trump administration is considering eliminating tariffs on billions of dollars of Chinese imports to spur progress toward a trade deal, less than two weeks before a high-level delegation from Beijing is scheduled to arrive in Washington for talks.

As the trade conflict between the U.S. and China grows in both size and scope, uncertainty about the future
has U.S.-based medical device manufacturers preparing against larger impacts. Chinese retaliatory tariffs now reach nearly every U.S. medical device exported to the country, according to recent reports.

U.S. Treasury Secretary Steven Mnuchin in recent weeks has proposed a tariff reduction as an incentive for China to sweeten its offer to the United States, according to two people familiar with the discussions who were not authorized to speak publicly.

Administration hard-liners, including U.S. Trade Representative Robert E. Lighthizer, are opposed to eliminating the tariffs before China has taken irreversible steps to meet the U.S. demands.

Last year the president imposed tariffs on Chinese industrial and consumer goods as leverage in talks aimed at shrinking the U.S. trade deficit and forcing China to abandon discriminatory trading practices.

If negotiations do not succeed by March 1, tariffs on $200 billion in Chinese products are scheduled to rise to 25 percent from 10 percent. Officials now are debating whether to instead eliminate the levies on some or all of the affected Chinese goods.

Last September 24, the Trump administration imposed 10% tariffs on $200 billion worth of imports. At the same time, China returned with 5% to 10% tariffs on $60 billion of U.S. goods, including $3.5 billion in medtech-related trade.

Added to tariffs levied this past summer, the latest round totals nearly all U.S. medtech exports to China in 2017, or about $4.75 billion, according to AdvaMed, the industry’s trade association.

“Depending on where you are in the industry, the tariff situation and related activities will impact you differently,” AdvaMed CEO Scott Whitaker said.

In addition, because of the disparity in the total dollar amounts between the two countries, China also threatened to impose extra, unspecified, non-tariff barriers with more qualitative effects, such as slowing regulatory approvals or investigating various companies’ operations within the country.

The latest $200 billion in tariffs on imports from China increased from 10% to 25% on Jan. 1, after the holiday shopping season. President Donald Trump has also called for an additional $267 billion in tariffs on top of that, totaling essentially all of China’s exports to the U.S., depending on the country’s actions going forward.

“As the number has gotten bigger, and as the back and forth between China and the U.S. has grown, we’re starting to see it impact us a little bit more,” Whitaker said. “When you get to $267 billion, then you’re really starting to affect all aspects of the economy.”

So far, the two biggest winners in the US-China trade war are Brazil and Russia.

Over the summer, China began retaliating to counter moves by the Trump White House to level 25% tariffs on Chinese imports, first slapping tariffs on $1.125 billion in U.S.-made medical devices. But the second round of retaliatory Chinese tariffs responding to Trump tariffs on Chinese imports brought the total level against U.S. medical technology products to more than $4.7 billion, AdvaMed said.