U.S. 301 Tariffs Hit Hard: Chinese Medical Device Industry Faces 50%-100% Tariff Increase, Company Stock Prices Plummet

The Office of the United States Trade Representative has officially announced the final implementation of the 301 tariffs on Chinese goods, which will be implemented in phases on September 27, 2023, January 1, 2025, and January 1, 2026. In response, the spokesperson of China's Ministry of Commerce expressed strong dissatisfaction and firm opposition. The tariffs affect a wide range of industries, including electric vehicles, semiconductors and medical products such as masks and gloves. China's medical device industry has suffered as a result, and many companies' share prices have fallen. China's total medical device exports declined in 2022, mainly due to reduced demand due to global epidemic relief.

In particular, the tariffs on related products will be increased to 50% or 100% : the tariffs on surgical and non-surgical respirators and masks will gradually increase from 7.5% to 50%, with the first adjustment taking effect on September 27, 2023 and the second adjustment on January 1, 2026; The duty on syringes and needles (other than enteral syringes) will increase from 0 to 100%, also effective September 27, 2023; The tariff on rubber medical and surgical gloves will gradually increase from 7.5% to 100%, with the first adjustment effective on January 1, 2025 and the second adjustment effective on January 1, 2026; The tariff on disposable textile masks will gradually increase from 7.5% to 50%, with the first adjustment taking effect on January 1, 2025 and the second adjustment taking effect on January 1, 2026; The tariff on enteral syringes (exempted in 2024 and 2025) will increase from 0 to 100%, effective January 1, 2026. Although the US claimed that the move was aimed at protecting the interests of its enterprises and workers, the spokesperson of the Chinese Ministry of Commerce pointed out that the US 301 tariff measures reflect a typical unilateralism and protectionist tendency, seriously undermine the international trade order and the stability of the global industrial chain and supply chain, and fail to solve the US trade deficit and industrial competitiveness. On the contrary, the price of imported goods in the United States has increased, and the final cost is borne by American businesses and consumers.

The United States is the main export market for China's medical device products, with exports reaching 111.551 billion yuan in 2022, accounting for 23.18% of the total exports. Despite the decline in exports of medical consumables, China still maintained its lead with a total of 251.469 billion yuan. Low-value consumables are one of the earliest and most widely exported medical device products in China. Data for 2023 show that China's exports of syringes, needles, masks and medical rubber gloves to the United States reached $224 million, $74 million and $442 million, respectively. The increase in tariffs will have an impact on Chinese companies that rely on exports, particularly companies such as Inco Medical. Tariffs on US medical gloves will increase from 25 per cent in 2025 to 100 per cent in 2026, which could reduce the market share of Chinese companies. Inkech believes that the tariffs imposed by the United States will lead to an increase in global glove prices, and Chinese manufacturers may benefit from the loss of market share in Malaysia.

In the short term, companies will face the choice of raising prices or squeezing margins. In 2024, the United States will increase tariffs on syringes and needles from 0% to 50%, which will increase the operating costs of Chinese companies in the United States, which may lead to a decrease in orders. Higher U.S. tariffs could also affect the costs and competitiveness of multinational medical device companies, increasing the complexity and cost of global supply chain management. Follow-up services for Chinese medical devices in the US market may also be affected. The industry and the market urgently need to return to rational cooperation.