Using Existing Trade Tools to Stem Economic and Health Consequences of COVID-19

The outbreak of COVID-19 is having an unprecedented impact on society and the way we interact with our colleagues, teachers, neighbors, and loved ones. Information and communications technology (ICT) products, services, and workers are helping us remain connected, working, and engaged as we observe social distancing. They are also at the heart of the medical response to COVID-19, as advanced technology helps to detect symptoms, monitor the spread of the virus, conduct tests, treat infection, and track recovery. Each day, the tech sector is working hard to make these tools accessible and available. As the Trump Administration considers new measures to facilitate a robust economic and public health response, we urge policymakers to use all available tools to enable healthcare providers, companies, educators, and communities to access necessary goods and services.

Lowering tariffs on products and components that support the COVID-19 response is a straightforward tool that will directly benefit the healthcare system, along with remote education and working arrangements. We commend the Trump Administration for taking initial steps to reduce tariffs on a range of disposable medical products imposed under the U.S. government’s Section 301 investigation of China’s unfair trading practices.

The 301 tariffs continue to apply, however, to many key components of other critical medical products and devices. These include in-vitro diagnostic test instruments, which have recently been granted Emergency Authorization by the Food and Drug Administration (FDA) as they are the fastest diagnostic tools for COVID-19; CT/PET scanners that help to detect infection in the body; patient monitoring devices that track patients’ vitals; and monofilaments, printers, and related printer parts, which are used for 3D printing and production of ventilators and other medical equipment. As the Trump Administration seeks to boost the medical response, we recommend that the administration prioritize elimination of these specific tariffs due to their substantial and positive impact on the U.S. response to the outbreak.

In addition to medical products and devices, existing Section 301 tariffs affect a broad set of other ICT goods and services, many of which support critical systems that are being severely tested as schools, workplaces, and communities across the country rely on technology more than ever to connect. In its recent guidance, the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) designated a wide range of ICT workers who work on these goods and services – from those responding to cyber incidents; to software and hardware engineers; to workers supporting the provision of global, national, and local infrastructure for computing services – as essential to assuring the continuation of critical ICT manufacturing and uninterrupted delivery of critical services. However, tariffs inhibit access to these very products and components necessary for these ICT professionals to do their jobs, and ultimately increase costs on essential components of ICT equipment used in healthcare facilities, schools, and businesses large and small.

More broadly, Americans are in need of economic relief and greater spending flexibility. Removing tariffs on even a subset of ICT products would put as much as $3.2 billion back in the pockets of American consumers, and broad tariff elimination would help businesses at a time when cash flows are strained and new operating procedures in the face of COVID-19 demand increased liquidity. The strain extends to supply chains, where more than ever firms depend on the ability to obtain products and components as nimbly and flexibly as possible. Ensuring that businesses retain the ability to secure those goods – wherever they may be most readily available – is essential to providing that flexibility. To further enable a comprehensive response effort and to provide businesses across all industries with the necessary flexibility to address the challenges presented by COVID-19, we encourage President Trump to defer collection of all tariffs, including those imposed under Section 301 authority.

Trade facilitation, including through tariff alleviation, is crucial as essential operations like hospitals struggle to obtain equipment and as supply chains around the world are challenged by restrictions of movement on workers and shipments. Unfortunately, many global governments have taken steps that impede the flow medical equipment and products, despite G7 and G20 leaders’ commitments to coordinate fiscal and trade policies to limit supply chain disruptions and ensure delivery of vital goods and services. Instead of export restrictions, import quotas, and procurement limitations, we encourage the Trump Administration to focus on expediting and prioritizing trade for critical items while coordinating with other governments worldwide to manage risk and simplify processes where possible.

Coordination within and among governments is necessary to preserve the health of our communities and lessen long-term economic harms. While this global crisis undoubtedly tests healthcare systems, it also enables the use of economic and trade tools to mitigate negative outcomes. Existing trade policy tools can help get supplies where they need to go in the short-term and establish best practices and processes for open markets and supply chain continuity in the long-term.

The tech sector is committed to marshaling our collective resources to support public health and economic stability as the world braces for the continued impact of the COVID-19 pandemic. We respectfully urge the Trump Administration not to overlook or underestimate available policy tools in the toolkit, including tariff reductions and supply chain access, as an important piece of the whole-of-economy response to the current public health crisis.

Public Policy Tags: Trade & Investment, Coronavirus Response