Manufacturers evaluate impact of tariffs

Trump administration announced it would also impose tariffs on the EU, Canada and Mexico last week
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Friday, June 1, 2018

WASHINGTON – AAHomecare, on behalf of its manufacturer members, has asked the U.S. Trade Representative to exempt 48 product categories from proposed 25% tariffs on imported materials and products from China.

The Trump administration announced last week that it would also impose 25% tariffs on steel and 10% tariffs on aluminum from the European Union, Canada and Mexico.

In a letter to the USTR in May, AAHomecare President and CEO Tom Ryan said the tariffs would “adversely affect the health and well-being of seniors, chronically ill individuals and persons with disabilities” and “adversely affect the financial condition of members of the home medical equipment industry.”

Among the product categories that would be affected by the tariffs are electro-diagnostic patient monitoring systems used in blood pressure monitors; ozone, oxygen and aerosol therapy, artificial respiration or other therapeutic respiration apparatus used in the parts and components of respiratory products, including CPAP devices, ventilators, portable oxygen concentrators, and the masks and tubing for these products; and electrical speed drive controllers used in joysticks and other controllers for electric motors used in wheelchairs and beds.

Ryan said manufacturer members have reported that if the tariffs are imposed, they would likely stop sourcing many of these products from China, negatively affecting the availability of these products, at the very least, on a short-term basis. Several members also reported that they would not be able to obtain similar products from U.S. sources, or if they were able to obtain similar products from U.S. sources, they would not be available with the same specifications or quality level as Chinese products.

“In these situations, imposing significant tariffs on imports of HME products from China will not merely disrupt the ability of seniors and person with disabilities or chronic conditions to obtain their HME products for a period of time,” he said. “Instead, it will ensure they do not obtain the products at all.”

Ryan also said tariffs would “exacerbate the financial pressures on HME manufacturers and providers that led to the access and supply problems arising out of (Medicare’s) competitive bidding program.”

During a conference call to discuss Inogen’s latest financial results, CEO Scott Wilkinson said the company was evaluating the potential impact of the tariffs on its supply chain.

“While aluminum and steel have received a sizable amount of attention with regard to the proposed tariffs, there is not a large quantity of either in our products,” he said. “We would also like to point out that the majority of our aluminum in our product is sourced domestically, so we do not expect there would be a significant impact on our raw material costs associated with any tariffs on aluminum.”

Wilkinson did acknowledge, however, that there are components in Inogen’s products, such as lithium-ion batteries and certain circuitry, that would be subject to the tariffs.

“We will continue to monitor these proposals and economic policy changes and take the necessary steps to protect our financial interest and reduce our supply chain risks,” he said.

Ken Spett, CEO of GF Health Products, said of the potential impact of the tariffs: “Looking through the list of affected items, we see some that would affect us—unfinished goods—but because it has little effect on finished goods—which is the bulk of DME—it won’t affect us as much as people think it will. If we were making washing machines, it’d be a different story.”

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