As I started writing this post on Tuesday, the tariffs on Canada, Mexico and China were in effect, but as the week progressed they have been lessened, delayed, cancelled, a new threat made to place a 250% tariff on lumber and dairy coming from Canada and even a tariffs threat on Russia. Where this will ultimately end is up for grabs, yet it’s important to understand the potential impact on both health care costs as well as regular consumer goods.
Before discussing tariffs, last week’s post included a piece on the House Republicans having passed a resolution to cut $800 billion dollars from the Energy and Commerce committee, which is responsible for federal healthcare (Medicaid and Medicare). While Trump’s has said he wouldn’t touch healthcare, the Congressional Budget Office (CBO) has released a report this week that indicates otherwise. The independent in-house agency confirmed that it would be impossible to reduce spending by $880bn without cuts to Medicare, Medicaid or the Children’s Health Insurance Program (Chip). That’s because after excluding Medicare, Medicaid and Chip, the committee oversees only $381bn in spending – much less than the $880bn target – the CBO said. … But the CBO assessment, which was requested by Democratic congressman Frank Pallone, the ranking member of the energy and commerce committee, and Brendan Boyle, ranking member of the budget committee, makes clear that the unprecedented spending cuts will be impossible without dismantling the social safety net programs relied upon by large numbers of Americans in every district – Republican and Democratic – across the country.The Guardian These cuts can only take place if the Senate approves the same resolutions the House does. Therefore, now is the time to start lobbying your Senators.
What are Tariffs: Tariffs are a tax on goods imported from another country. The importer of the goods-American companies-pay the tariff, which can be, and often is, passed on to the consumer. Sometimes manufacturers will absorb some or all of the tariff in order to remain competitive. The purpose of the tariffs is to encourage Americans to purchase American made products whenever possible and not higher taxed imported goods. Money from tariffs, goes to the US Dept.of Treasury and enters the General Affairs Budget. Learn more by reading 5 Things to Know About Tariffs and How they Work.
According to the Peterson Institute for International Economics, Trump’s tariffs on Canada, Mexico and China are expected to cost the typical US household more than $1,200 per year.
Health Care: China is a large produce of pharmaceuticals, while Mexico is the top source of medical devices. In February, healthcare groups noted that tariffs could increase prices for generic drugs and essential hospital supplies. The generic drug market, with thin profit margins, faces financial pressure from potential tariff-induced cost increases. Domestic manufacturing of medical supplies is supported, but higher costs could exacerbate hospital financial challenges. Medical Economics
HFMA (Healthcare Financial Management Association) voiced similar concerns about how the tariffs will strain the healthcare supply chain. In a letter to Trump, the American Hospital Association (AHA) cited China as a source of cancer and cardiovascular medications, immunosuppressives and antibiotics. The AHA said nearly 30% of APIs come from China, as do many single-use devices (e.g., blood pressure cuffs) and types of personal protective equipment for healthcare workers.
On March 4, Forbes, in its article As Tariffs Begin; What Will They Do To Drug Prices And Availability? not only talks about increasing prices but they pointed out another consequence, Tariffs could likely have far-reaching effects on the pharmaceutical industry and the healthcare system. Reduced profit margins for drug manufacturers could lead to decreased investment in research and development, and increased pressure on healthcare providers will force insurers to reduce drug coverage and raise consumer out-of-pocket expenses to maintain their profit margins.
Bottom line is that we can expect to see increases in healthcare costs, including medications, supplies, and hospitalizations, as well as potential shortages of supplies.
Consumer Costs: How this will impact you depends on where you live and what you purchase. Living in Vermont, where Canada is a major trading partner, we’ve been told that gas prices could increase by as much as .40¢ per gallon and to expect price increases in heating oil and diesel.
The taxes are expected to lead to higher prices on a wide range of imports, including Canadian lumber, seafood poultry and prepared meats; fresh produce from Mexico (avocado, bell peppers, tomatoes, cucumbers, berries, greens etc.) and toys from China.
The U.S. imported more than $45 billion worth of agricultural products from Mexico in 2023. Almost three-quarters of such imports consisted of vegetables, fruit, beer, tequila and other drinks and spirits, according to the U.S. Department of Agriculture. At the same time, the U.S. imported roughly $40 billion worth of Canadian agricultural products, including beef, pork, grains, potatoes and canola oil, the USDA notes. Subject to 25% tariffs, prices on such products could rise substantially, depending on how much of the cost increase businesses pass along to shoppers. Fresh produce prices could increase by about 3%, while food prices overall may increase by 2%, according to a new analysis from Democrats on Congress' Joint Economic Committee. According to the Atlanta Fed, the tariffs on three key U.S. trading partners would bring up prices on everyday purchases, including food and beverages, by as much as 1.63%, if businesses pass along anywhere from half to all of the added costs to consumers. CBS News
What to do: As the saying goes, “Hope for the best but prepare for the worst.” Over the years I’ve written quite a bit about how to reduce costs, be involved in your community to effect change, where to go for reduced medications etc. A lot of this is summed up in the November 2024 post What to Do Now that Trump is Elected 2024 Edition
Because the health implications could be significant, in part because of medications and treatments you may be on, it’s recommended that you have conversations with your provider before the worst aspects of the tariffs are felt. Discuss with them concerns you may have about possible impacts and developing a Plan B.
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