Cut tariffs and open US economy to fight COVID-19 pandemic

While the election results were a mixed bag for the two major parties, President-elect Biden received a clear mandate from voters to more vigorously prosecute the war against the COVID-19 pandemic. The new president and Congress will have an effective weapon at their disposal: eliminating tariffs on all imported personal protective equipment (PPE) and other supplies deployed in the fight against the virus.

A June 2020 report from the U.S. International Trade Commission (USITC) identified duties ranging from 2.5 percent to 25 percent on more than 100 types of PPE and other goods used to protect medical workers and treat patients suffering from the coronavirus. Between the Harmonized Tariff Schedule of the United States and the Section 301 tariffs the Trump administration imposed on imports from China, the duties target supplies such as protective aprons, gloves, face masks, goggles, hand sanitizers, diagnostic equipment, electrocardiographs, and COVID-19 diagnostic test instruments and apparatus.

Tariffs on these foreign supplies artificially raise costs and make them less widely available in America. This negative impact of tariffs hurts the economy in normal times, but it is especially harmful during a national emergency when demand is spiking for PPE and other necessary supplies. The Trump administration tacitly acknowledged this when it granted certain limited exemptions from its sweeping Section 301 tariffs in response to the pandemic.

Awareness of the problem of PPE tariffs is growing in Congress. Sens. Pat Toomey (R-Pa.) and Maggie Hassan (D-N.H.) have introduced the Stop PPE Taxes Act of 2020, which would suspend duties for two years on goods the U.S. International Trade Commission has identified as related to fighting COVID-19. Senate Finance Chairman Chuck Grassley (R-Iowa) wants to see the bill voted on in the lame-duck session.

The legislation certainly points in the right direction. But instead of a two-year suspension, Congress should permanently eliminate all duties on PPE and related supplies in the Harmonized Tariff Code. Making the duty cuts permanent would add certainty to supply chains and allow U.S. hospitals and other health care providers to more readily stockpile needed supplies for future emergencies.

When President-elect Biden takes office in January, he should move immediately to revoke all the Section 301 duties on PPE and other COVID-related products imposed by his predecessor. He should also refrain from imposing any “Buy American” provisions on government procurement of any such supplies, both to keep down the costs to taxpayers and to ensure that critical goods are widely available. 

A policy of free trade and economic openness strengthens the domestic fight against the pandemic. Eliminating tariffs would make supply chains more resilient, allowing retailers and health care providers to diversify sourcing among a wider array of reliable suppliers, mitigating disruptions and price spikes. International trade frees us from overdependence on a narrow base of domestic producers.

Beyond trade, a more globalized U.S. economy is more likely to develop new products and vaccines to fight the virus. One of the most promising vaccines announced in recent days has been developed by a partnership between Pfizer and the German-based pharmaceutical company BioNTech, which was founded by two Turkish-German scientists. And across the United States, hundreds of thousands of foreign-born health care workers – doctors, nurses and medical research scientists – are working heroically to mitigate the impact of COVID-19.

To stimulate the U.S. economy as we weather this crisis, Congress should take the even more ambitious step of unilaterally repealing all U.S. tariffs — and not just those related directly to the coronavirus. As a recent Mercatus Center study noted, cutting import taxes would deliver direct relief to American households (especially those earning lower incomes), cut production costs and boost the competitiveness of U.S. producers, attract more foreign investment and stimulate U.S. exports as well as imports.

Despite partisanship rising to new levels in Washington, the president and Congress have an opportunity to come together, in a lame duck session or early in the new year, to enact a concrete plan to permanently cut import taxes on equipment and supplies vital to fighting the coronavirus. And from there, they should work together in the months and years ahead to keep the United States open not only to trade but also to foreign talent and investment, in order to restore our economy and defeat the virus.

Daniel Griswold is a senior research fellow and co-director of the Trade and Immigration Project at the Mercatus Center at George Mason University.