Pharmaceuticals, bandages, surgical gowns and more among medical products likely to be affected by new tariffs on Mexico [Updated]

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Alexander Gaffney Senior Manager, Health Research Institute, PwC US June 10, 2019

UPDATE: On June 7, days before the US was scheduled to impose 5 percent tariffs on goods imported from Mexico, the US State Department issued a joint US-Mexico statement announcing the two nations had come to an agreement and the tariffs would not go into effect this week. According to the US State Department, the two nations agreed that the US would not impose the tariffs and that Mexico would intensify efforts to curb the flow of undocumented people to the US, among other things. [Last update June 10, 2019.]

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The US is scheduled to impose a 5 percent tax on goods coming from Mexico starting June 10, a move that could impact US-based companies that manufacture medical products, from pharmaceuticals to bandages to infusion kits, in Mexico or that import those goods from the nation.

The trade taxes, especially if they rise as promised, could eventually ripple throughout the US health industry. Announced by President Donald Trump last week on Twitter, the tariffs are meant to force Mexico to take active measures to stop the flow of undocumented immigrants across the border between the two nations. President Trump has said that he intends to raise the tariffs by 5 percent a month until they top out at 25 percent if negotations continue unsuccessfully.

The tariffs would apply to all products coming into the US from Mexico, including medical devices and pharmaceuticals. According to an analysis of FDA records by HRI, there are 136 medical device facilities registered in Mexico associated with products cleared or approved by the federal agency. Some of those facilities manufacture products, while others repackage or relabel them for sale. These facilities make or distribute a wide variety of medical goods, such as bandages, surgical gowns, catheters, infusion kits and more.

HRI impact analysis

The tariffs could affect broad parts of the US health industry, from the companies manufacturing medical products with parts made in Mexico to the hospitals that use them and the payers and consumers paying for them.

For companies with global operations and supply chains, the changes—if enacted and sustained—could challenge their ability to compete with those that make their products in a nontariff region.

However, because similar trade skirmishes are occurring between the US and its other trading partners, including China and India, there may be fewer nontariff alternatives for companies to consider. President Trump last week announced he would remove India’s status as a beneficiary developing country, thereby subjecting more of its products to tariffs, and also announced that some products manufactured in China would be subject to an enhanced rate of 25 percent rather than 10 percent. For more on the Mexico tariffs, please see PwC’s briefing, President Trump threatens tariffs on all imports from Mexico.

Contact us

Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Alexander Gaffney

Senior Manager, Health Research Institute, PwC US

Tel: +1 (202) 836 1604

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