U.S. hospitals and distributors will likely absorb the brunt of the new import taxes hitting Chinese-made medical devices and components next month, but jobs and research in Minnesota's bustling medical-technology sector could be threatened if a full trade war with China breaks out.
"That's when things get scary," said Shaye Mandle, CEO of the Minnesota health technology trade group the Medical Alley Association.
The Trump administration included about $800 million worth of imported medical devices and components in a wide-ranging group of tariffs on $34 billion in Chinese imports to the U.S., slated to begin July 6. For now, higher costs for items like Chinese X-ray machines and anesthesia devices are likely to be borne directly by U.S.-based device importers or their hospital customers.
The tariffs are designed to persuade the Chinese to halt practices that U.S. trade officials say are unfair and coercive, including the "forced transfer" of American technology and intellectual property. China reciprocated with a similar tariff package, causing President Donald Trump to threaten new tariffs on an additional $200 billion in goods.
That rapid escalation is causing anxiety for some med-tech executives because tit-for-tat responses can lead to a damaging trade war that could target medical devices directly.
"That is what we are most concerned about," Mandle said. If a trade war develops, "to [get] access to that market, the cost is going to go up, and the push to absorb it is then going to be on companies that are exporting to China."
Medical technology is an important industry in Minnesota, from well-known employers like Medtronic PLC and Coloplast A/S to the teeming ecosystem of smaller device firms around the state. More than 30,000 Minnesotans work in the industry, creating a $7.5 billion market for the state.
China is the largest single buyer of medical devices and optical supplies from Minnesota, with exports up 14 percent to $192 million in the first three months of this year.