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Buy America order could worsen medical supply shortages, economists say

Nancy Marshall-Genzer May 12, 2020
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The Port of Los Angeles. The Buy America initiative may raise the price of medical supplies imported from China. Mario Tama/Getty Images
COVID-19

Buy America order could worsen medical supply shortages, economists say

Nancy Marshall-Genzer May 12, 2020
Heard on:
The Port of Los Angeles. The Buy America initiative may raise the price of medical supplies imported from China. Mario Tama/Getty Images
HTML EMBED:
COPY

More than 200 economists have signed a letter asking the Trump administration not to impose Buy America restrictions on medical supplies. The letter won’t be officially released until Wednesday, but we got an advance copy. The economists are worried that a new Buy America order would hurt American consumers.

White House trade adviser Peter Navarro has been talking about it for weeks now — an executive order that would require government agencies to only buy U.S.-made medical products. 

“Buy American is going to be the law of the land, I believe, soon — at HHS, at DOD, the Veterans Administration,” Navarro said on Fox News this month.

Navarro didn’t respond to request for comment, so it’s unclear exactly what the Trump administration has in mind. But the economists’ letter says a Buy America order could cause even more medical supply shortages. Bryan Riley, director of the Free Trade Initiative at the National Taxpayers Union, which spearheaded the letter campaign, said the executive order could apply to “anything that could be classified as personal protective equipment. From hand sanitizer to medical gowns.”

The letter says the order would also push up the cost of medical supplies and possibly drugs for consumers. Mary Lovely, professor of economics at Syracuse University, signed the letter. She said to just look at the prices of medical supplies from China that were, until recently, subject to 25% U.S. tariffs.

“On average, prices rose between 25 and 30%,” Lovely said.

But other economists, like Christine Ries, professor of economics at the Georgia Institute of Technology, would be OK with a Buy America order if it included price controls in exchange for subsidies or tax breaks.

“The company would have to certify that yes, this was Buy American and yes they were keeping the price at the same level as when China was supplying,” Ries said.

The Buy America debate isn’t limited to economists. There are reports of considerable disagreement at the White House over Navarro’s proposal.

COVID-19 Economy FAQs

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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