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Chinese PPE shipments drop ahead of US tariff exemption extension


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Chinese PPE shipments drop ahead of US tariff exemption extension

The U.S. government has extended exemptions from section 301 tariffs on imports of Chinese medical supplies, including personal protective equipment, which had been due to lapse March 31. The move is unsurprising given the importance of the supplies during the coronavirus pandemic, particularly given importers of healthcare supplies are already facing additional costs from freight and other commodities, as flagged in Panjiva's research of Feb. 25.

Panjiva's analysis shows that U.S. imports of products needed for the diagnosis and treatment of COVID-19 dipped 6.6% sequentially in January based on product categories defined by the U.S. International Trade Commission and at $10.6 billion were 24.4% below their May 2020 peak. There was little evidence of stockpiling, however, with imports from China down 9.3% sequentially and off by 64.6% since May 2020.

Supplies from China have been particularly important for PPE. Chinese suppliers represented 58.5% of U.S. imports in the three months to Jan. 31. Imports of PPE from China — including gloves, masks and gowns — fell 14.5% sequentially in January, leading the total down 12.4% to the lowest level since March 2020. That will likely increase the impetus behind the Biden administration's executive order seeking to secure critical supply chains.

More positively, imports of diagnostic tests rose 37.1% sequentially and at $4.06 billion were the highest on record. Imports have been led by an 85.6% rise in imports from the EU, likely including shipments linked to Roche Holding AG and bioMérieux SA.

While the EU would normally be considered an ally from a supply chain perspective, it is worth noting that the recent shortage of vaccines has led to an emergence of new protectionism, with the EU blocking exports to Australia, Financial Times (London) reported. Similarly, rules for testing kits are not in place but the principle has been proven.

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Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.