This is a guest post from Ernesto Hernández-López, Professor of Law at the Dale E. Fowler School of Law, Chapman University. He researches international trade and international law.
Just as the United States and China agreed to a truce in tariff retaliations with the Phase One Agreement on February 14, 2020, the coronavirus began to spread globally and became a pandemic the next month. For this crisis, Personal Protective Equipment (PPE) is desperately needed not just by medical workers and patients, but for everyday shopping, working, and going to school. Including face masks and gloves, PPE is just one set of goods, amongst over a thousand, subject to additional tariffs pursuant to a Section 301 trade enforcement action against China, a major PPE supplier. Deploying tariffs, President Trump promised to “tax the hell out of China.” In reality Americans pay more for these items, as PPE shortages plague the country. This adds to racial disparities that afflict the COVID response.
This post describes my forthcoming article Trade War, PPE, and Race and provides a few trade law updates. Specifically, many exclusions from Section 301 tariffs expire soon and the effectiveness of the US-China deal is questioned. These updates identify what is at stake: with retaliatory tariffs on needed goods and when the virus resurges in the fall and winter or morphs into a second wave.
Tariffs on PPE are significant. In June, the International Trade Commission reported that over two thirds of COVID-related PPE faced Section 301 duties. Head gear, medical aprons, and garment imports received a 25 percent rate and gloves, hair nets, scrubs, and medical gowns faced the 7.5 percent rate. The administration has been steadfast with additional tariffs. It imposed them for N95, surgical, and disposable face-masks and waited until mid-March to temporarily suspend them with an exclusion. This summer, Trade Representative Robert Lighthizer told Congress that tariffs for PPE are “required” to encourage domestic production.
Increasing PPE prices or limiting their supplies critically impacts minority communities. The New York Times reports that African Americans and Latinos are three times more likely to be infected and are nearly twice as likely to die from COVID. The COVID Tracking Project and
APM Research Lab reach similar conclusions. These communities make up the major part of essential workers, who need PPE to work and avoid infections. In many jobs, the workforce is overwhelmingly female and non-white. The reality is that the virus spreads blindly into living, work, and health settings that are far from equal.
PPE impacts work safety and public health. The UC Berkeley Labor Center found that in California over 20,000 worker infections could have been avoided with proper PPE. Another occupational health study concludes that over seventy-five percent of healthcare workers (support, technical, and practitioner) are exposed to the coronavirus at least once per week and for over ninety percent this is at least once per month. Medical research finds that minority frontline healthcare workers have a fivefold risk of infection and the greatest risk comes from reusing or inadequate PPE. In sum, tariffs effectively weaken COVID responses and disproportionately impact persons of color.
China though still dominates PPE production. Can the impacts of tariffs be curtailed? Yes, the administration can easily stop them. Section 318 of the Tariff Act of 1930 allows it to eliminate tariffs for “medical, surgical, and other supplies.” This can be done quickly, allowing PPE imports to enter duty-free without the 7.5 and 25 percent tariffs. If it waits too long, it will play PPE catch up again, repeating earlier protective item disasters this year.
Otherwise, the USTR can extend tariff exclusions for PPE and other medical supplies, despite this being a slow and unclear process. Many exclusions have expired or are set to expire in September. There is room to rollback tariffs from hampering public health efforts. The International Trade Commission found that 203 product classifications were related to the COVID response, with PPE, pharmaceuticals, ingredients to make pharmaceuticals, hospital supplies, and items for vaccine administration. Fifty-seven percent of these had Section 301 tariffs. Twenty-one PPE classifications faced these levies.
These two options offer quick suggestions to avoid the election season optics of tariffs: contributing to PPE shortages, fueling racial disparities, and frustrating pandemic policies. Trade War, PPE, and Race goes into more detail about PPE, Section 301 retaliation and exclusions, and Congress’s role. Part I describes the PPE crisis and how the federal government responded from January to May of 2020. Part II focuses on Section 301 tariffs and the trade war. Part III explains how legal doctrine contributed to shortages, providing the executive branch the means to prioritize tariffs. It suggest reforms for Section 301. Part IV explores the racial consequences of limited PPE.
