Free Trade, Not Tariffs, Is How to Reduce the Medical Equipment Shortages Hurting the COVID-19 Response
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Commentary

Free Trade, Not Tariffs, Is How to Reduce the Medical Equipment Shortages Hurting the COVID-19 Response

The COVID-19 response effort is hurt by shortages of essential health care resources like ventilators, hand sanitizer, and personal protective equipment.

The COVID-19 pandemic is causing shortages of essential health care resources like ventilators, hand sanitizer, and personal protective equipment for health care workers. Free trade and markets, not import restrictions and government mandates, are the best options to ensure adequate supplies of essential goods.

President Donald Trump’s ongoing trade war with China has already exacerbated shortages by limiting imports of these products. According to Chad P. Brown, a senior fellow at the Peterson Institute for International Economics, the Trump administration’s tariffs on Chinese medical products “has forced China to divert the sales of these products…from the United States to other markets.”

Robert Lighthizer, head of the Office of the U.S. Trade Representative, defended the administration’s actions in The Wall Street Journal by claiming “the administration imposed no new tariffs on several key products needed to fight the virus, like breathing masks, oxygen masks, ventilators, and nebulizers.” However, as Reason’s Eric Boehm pointed out, other essential products including “hand sanitizer, patient monitors, thermometers, oxygen concentrators, medical protective clothing, sterile gloves, and more were targeted with tariffs in three phases since July 2018.”

Now, lawmakers including Sen. Tom Cotton (R-AR), Sen. Josh Hawley (R-MO), and Sen. Marco Rubio (R-FL) are doubling down on protectionist trade policies rather than embracing imports of essential goods. The White House is also considering issuing an executive order that would require US agencies to “buy American” in their procurement of pharmaceuticals and other goods deemed essential to public health.

In a press briefing last week, White House Trade Advisor Peter Navarro stated, “One of the things that this crisis has taught us…is that we are dangerously over-dependent on a global supply chain for our medicines like penicillin, our medical supplies like masks, and our medical equipment like ventilators.”

Calls to end reliance on Chinese supply chains have largely been justified by trying to use the incorrect assertion that 80 percent of America’s drug supply comes from China. In fact, the Food and Drug Administration (FDA) only tracks the number of manufacturing facilities that export drugs to the US, not the volume of drug imports from other countries. The FDA reports that, of the nearly 2,000 manufacturing facilities that produce drugs for the US, 230 are located in China, 510 in the US, and 1,048 in the rest of the world.

In a letter to President Trump, the Association for Accessible Medicines, a trade association for major pharmaceutical producers, argued that “a diverse pharmaceutical supply chain is precisely what enables the industry to respond quickly and make adjustments in its supply chain sourcing during natural emergencies and global public health crises.”

The letter also claimed, “Proposals to drive all manufacturing to the United States…overestimate the potential feasibility and underestimate the time and effort it would take to make such changes.”

Navarro clarified the impact of the proposed executive order saying it would not take effect “during this crisis because we don’t want to disrupt anything… but going forward, after this is over, the VA, HHS, DOD, and this government buys American for essential medicines, our medical countermeasures, and the medical supplies and equipment we need.” In fact, none of the proposals would have any effect on our response to COVID-19.

Trade hawks are using the once-in-a-lifetime global pandemic to justify misguided protectionist policies. Both in normal times and during a crisis, open international trade makes it easier and less expensive to produce and purchase goods in the most efficient manner possible. Discouraging imports only hurts American consumers and, in times of crisis like this, puts the health of Americans at risk.

Vittorio Nastasi

Vittorio Nastasi is a policy analyst at Reason Foundation where he works on Florida policy issues including education reform and water quality management.