Nations scramble for protective medical gear to prevent infections and a breakdown of health systems. Masks, gloves, gowns and ventilators are in short supply. The European Union announced export restrictions on some supplies, limiting EU sales to countries outside the bloc. “Europe’s actions could be self-defeating,” reports the Peterson Institute for International Economics. “They may disrupt supply chains, seize up the very production lines Europe depends on, and prompt other countries to impose export restrictions, further limiting Europe’s access to key medical gear. And they may also block EU exports of vital equipment to the world’s poorest victims of the pandemic.” Other countries could follow suit with restrictions. In separate analysis, Peterson points out that the US trade war with China also disrupted supplies of such protective medical equipment, with tariffs resulting in shortages and higher costs for hospitals. The Trump administration began imposing tariffs in July 2018. US companies did not fill the gap in supply; hospitals had little choice but to purchase Chinese-made products at higher prices. On March 10 and 12, the US temporarily reduced tariffs on some needed products. Because tariff reductions are temporary, the report warns, “If shortages arise globally, a system of temporary exclusions creates perverse incentives for Chinese medical suppliers to make American customers their last choice.” A diversified supply chain, including some based at home, provides security during a pandemic. The analysis concludes, “Trump’s trade war with China, and his general mistreatment of trading partners, including the European Union, has put Americans at risk.” – YaleGlobal
The US-China trade war hiked costs of protective medical gear, reduced hospital stockpiles; EU export limits on such gear put poor nations and Europeans at risk
© 2020, Peterson Institute for International Economics
