(Story updated at 8:35 p.m. ET)
The Trump administration on Thursday floated the idea of imposing a 20% tax on imports from Mexico to pay for a wall along the southern border aimed at stopping illegal immigration.
Medical distributors and manufacturers source raw materials and finished products from many locations around the world, including Mexico. The U.S. imported more medical, surgical, dental or veterinarian instruments from Mexico than any other country between January and November of last year, representing 27% of all such imports.
White House press secretary Sean Spicer said that the import tax is something that Trump wants to include in a comprehensive tax reform package—something proposed by congressional Republicans to overhaul corporate taxation.
Spicer later told NBC News that the tax is not a policy proposal but rather an example of an option of how to pay for the wall. Trump has repeatedly said Mexico will pay for it. President Enrique Pena Nieto has repeatedly refused to do so. Trump's tax proposal would not affect Mexican residents, only the Mexican companies that sell products to the U.S.
Major healthcare distributors have been reluctant to comment on Trump's previous proposals of border taxes. The Health Industry Distributors Association, the sector's lobbying group, and the Advanced Medical Technology Association, which represents medical-device makers, both declined to comment Thursday on any discussion of border taxes, including a potential tax on Mexican imports.
Cash-strapped hospitals in the U.S. are already working very hard to consolidate the products they buy and reduce costs for drugs and supplies, the second-biggest expenditure after labor. An additional tax on any imported healthcare products could cause pricing issues for hospitals and their group purchasing organizations.
Census data show that Mexico exported to the U.S. more than $5.4 billion worth of medical, surgical, dental or veterinarian instruments between January and November 2016, including electro-surgical instruments, needles and syringes. The U.S. imported over $270 billion in commodities from Mexico between January and November 2016.
During that time, the U.S. imported from Mexico $758.1 million in orthopedic appliances, artificial body parts and hearing aids, or 8% of such imports; $153.6 million worth of X-ray equipment and accessories, or 4.1% of such imports; and $360.6 million in pharmaceutical products, including drug-coated bandages and some medications, or 0.43% of such imports.
Mexico is the fourth-biggest exporter to the U.S. of orthopedic appliances, artificial body parts and hearing aids; and ranks seventh among other nations when it comes to X-ray equipment and accessories.
Mexico represents a small amount of all imports in the categories of products mentioned in this story—with the exception of instruments—because the products come to the U.S. from a variety of countries. Global imports of these products into the U.S. represented $84.7 billion for pharmaceutical-related products; $20 billion for medical, surgical, dental or veterinarian instruments; $9.5 billion for orthopedic appliances, artificial body parts and hearing aids; and $3.7 billion worth of X-ray equipment and accessories.
It's also important to note that U.S. companies export significantly more of these commodities to the world than the U.S. imports from Mexico. Between January and November of last year, the U.S. exported $43.8 billion in pharmaceutical products; $24.2 billion in instruments; $8.5 billion in the orthopedic appliances, artificial body parts and hearing aids category; and $3.7 billion in X-ray equipment and accessories.
The proposed tax would require legislation. It's unclear whether members of Congress would be willing to pass such legislation, given that many American companies located in their districts depend on imports from Mexico, including manufacturers of automobiles, heavy machinery and plastics. Mexico is the nation's third-largest goods trading partner, behind China and Canada.
Trump has also said he wants to renegotiate the North American Free Trade Agreement, which outlines policies between the U.S., Canada and Mexico.