The National Electrical Manufacturers Association (NEMA) testified Tuesday before a committee about the ramifications a tariff proposal by the Office of the United States Trade Representative, would have for medical imaging and other types of manufacturers who import their products or parts from China.

The trade association argued to the Section 301 committee that imposing a 25 percent tariff on more than 100 electrical products imported from China poses the risk of creating an unfair playing field among manufacturers as well as additional tax burdens on companies and the risk of upsetting the Chinese in a move that could hurt U.S. trade internationally.

"According to U.S. government trade data, we have estimated the 2017 value of Chinese shipments to U.S.-based electrical and medical imaging manufacturers was approximately $9 billion, or slightly less than 1/5 of the entire $50 billion in imports targeted by the proposal," NEMA told HCB News. "If the 25 percent tariffs are implemented as proposed, they would represent a tax increase on U.S. manufacturers and their industrial, commercial, and residential customers valued at about $2.25 billion."

The proposal, announced in March by President Donald J. Trump, aims to curb interest among American companies in transferring technology and intellectual property to domestic Chinese enterprises, issuing a tariff on approximately $50 billion worth of Chinese imports.

USTR argues that such an action is valid under Section 301 of the Trade Act of 1974, which authorizes the president to take all appropriate measures, including retaliation, to remove any act, policy, or practice of a foreign government that violates an international trade agreement or is considered unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce.

The list of items affected includes CT, MR, ultrasound, and X-ray units, but extends to a variety of other technologies, from electric motors to residential thermostats.

NEMA claims that by issuing a 25 percent tax on each imported product or component, the tariff puts those affected by it at a competitive disadvantage to domestic and foreign manufacturers not impacted.

In addition, the proposal places greater tax burdens on U.S. manufacturer operations that already pay for steel and aluminum imports, and increases the risk of a retaliation by China that could materially disadvantage many in the Chinese and global markets.

NEMA recommended that should USTR move forward with its plans, the tariff be applied for the shortest possible amount of time as a precursor to a negotiated plan for addressing Chinese practices as outlined in a report conducted by the Section 301 committee.

It also urged the administration to narrow the number of items listed so as not to harm unintentionally its members’ businesses, suggesting the following actions:

•The exclusion from the tariff of a list of inputs for which non-Chinese substitutes are not readily available (or able to meet U.S. manufacturer or Federal standards)
•Inputs from wholly-owned U.S. facilities within China (since those reflect regular commercial decisions rather than China’s efforts to force technology transfer – and the impact would be to disproportionately hurt U.S. rather than Chinese businesses)
•Inputs from China that have a high percentage of U.S.-made content.

"U.S. electrical and medical imaging manufacturers support an approach that results in fair and open global markets through the application of clear, binding, and enforceable trade rules and compliance with international norms of intellectual property protection," NEMA said. "We urge the Administration to consider and pursue alternative measures to bring about the necessary changes in Beijing that result in free and fair trade in our global marketplace."

Other organizations have also called on USTR to reform its proposal or seek other alternatives, such as Vizient, which fears that such tariffs would raise the price of products and services for hospitals, patients and American taxpayers.

“Vizient respectfully requests that the Trade Representative continue working with health care industry stakeholders to take steps to ensure that the final list of products subject to the proposed additional duties does not adversely impact the health care industry, specifically the costs to our nation’s hospitals, patients, and taxpayers,” said the company in a statement.

NEMA represents nearly 350 electrical equipment and medical imaging manufacturers that offer a combined total of 360,000 American jobs in more than 7,000 facilities across the country, and produce $106 billion shipments of electrical equipment and medical imaging technologies annually with $36 billion in exports.

Public hearings on the matter are currently taking place from May 15-May 17 at the U.S. International Trade Commission in Washington, D.C.