End COVID-era tariff waivers for medical supplies

The COVID-19 pandemic exposed a major Achilles’ heel in the U.S. economy: the nation’s tremendous dependence on imported goods. America’s hospitals were particularly affected at the start of the coronavirus outbreak, when imports of personal protective equipment, or PPE, were cut off.

In response, Congress passed legislation to increase America’s domestic PPE manufacturing. But at the same time, tariffs on PPE imports were also waived in an effort to boost supplies. Three years later, however, the federal “Public Health Emergency for COVID-19” is set to expire in May. When it does, tariffs on PPE imports should be restored.

Looking back, it’s clear that America’s COVID-19 response was driven by simple necessity. At the onset of the pandemic, other countries hoarded PPE supplies in order to meet the needs of our citizens. That led to rapid shortages in America’s PPE inventory. In response, U.S. manufacturers quickly retooled their production lines and started cranking out masks and hand sanitizer. This marked the start of a U.S. manufacturing resurgence in PPE — an important step to help the nation become more self-sufficient in times of crisis.

Unfortunately, the decision to waive tariffs on personal protective equipment is now conflicting with the stability of America’s emerging PPE industry. Dozens of U.S. companies have made significant investments in domestic facilities to produce PPE, including respirator masks, medical gloves and surgical gowns. Continuing the tariff exclusions would undercut their investments — and discourage further attempts to shore up America’s PPE industry.

The tariffs in question have proved critical to America’s trade arsenal. They were imposed in 2018 in response to years of China’s predatory trade practices. Since that time, the tariffs have helped to reduce China’s dominance in the U.S. market. In fact, the tariffs have boosted America’s overall supply chain resiliency by encouraging both domestic production and more sourcing from other countries. As a result, the U.S. economy was better able to withstand the global slowdown that emerged from China’s “Zero COVID” lockdown.

Now, with the COVID-19 health emergency set to expire in May, it’s time to bring back tariffs on PPE imports. Unfortunately, import lobbyists are already looking to keep the tariff exclusions in place. They’ve submitted scores of requests to the Office of the U.S. Trade Representative to continue the waivers.

Maintaining such exclusions would simply benefit Beijing, though, and undermine the sizable investments that domestic manufacturers have made to rebuild America’s domestic PPE industry. It would also conflict with the goals set by Congress and the Biden administration in the 2021 Infrastructure Investment and Jobs Act. That legislation was specifically crafted to rebuild key parts of America’s manufacturing base, including medical supplies such as surgical masks, air filters, face shields, protective eyewear and medical gowns.

Thanks to the hard work of domestic manufacturers, reimposing the PPE tariffs would have little or no impact on prices. We’ve already seen precisely this scenario with the aluminum tariffs imposed by the Trump administration in 2018. Because of those tariffs, U.S. aluminum producers have invested in new manufacturing operations, increased production, and gained market share. And now, despite the Biden administration imposing hefty new tariffs on Russian aluminum, prices haven’t budged.

The tariffs imposed in recent years have helped to reshore critical domestic industries. We can learn from this by ending tariff exclusions that have become a pandemic-era holdover.

There’s no reason to wait until the next health crisis for America to rebuild its self-sufficiency in medical equipment. The Biden administration should reinstate tariffs on PPE imports and make sure that America is better prepared for the next health care crisis.

• Michael Stumo is CEO of the Coalition for a Prosperous America. Follow him on Twitter @michael_stumo.

Source: WT