Notice & Comment

COVID’s Racial disparity: when Tariffs Tax Face Masks and More, by Ernesto Hernández-López

The pandemic hit the United States two years into a trade war, in which President Trump promised to “tax the hell out of China.” One casualty is that Americans pay more for Personal Protective Equipment (PPE), like face masks, medical gowns, and gloves. PPE helps prevent COVID infections. Meanwhile, the pandemic response suffers from racial disparity, a “crisis within a crisis.” 

This post describes COVID’s racial inequalities, explains how trade policies exacerbate PPE crises, and suggests ways to pinpoint how administrative actions add to racial disparities. It argues that PPE shortages, aggravated by tariffs, have negative racial consequences. This previews my forthcoming article Trade War, PPE, and Race.

PPE is essential. Face masks can decrease the daily growth rate of infections by up to 2 percent. If required in the United States, this could have averted up to 450,000 COVID cases in April and May. Multiple studies reach similar conclusions or identify larger reductions

Earlier this year, first responders, patients, and workers could not find PPE. There was a severe shortage. An Inspector General report from the Department of Health and Human Services (HHS) described this affliction. So did news of hospital desperation, vulnerable patients and medical staff, nursing homes and outpatient centers, states competing for PPE, and nurses using makeshift masks.

Unfortunately, the trade war made PPE imports from China more expensive with new tariffs, effectively adding customs charges of 7.5 or 25 percent. The International Trade Commission confirmed these tariff rates to Congress. Face masks, gowns, and gloves were more expensive, along with CT systems, oximeters, hand sanitizer, and other medical items. Tariffs effectively decreased essential supplies, when we most needed them. China is the largest source of PPE. Its imports face these charges under Section 301 of the Trade Act of 1974. In this Section 301 case, the United States tries to force changes to China’s intellectual property practices by taxing imports

Difficulty buying PPE 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 ProjectAPM Research Lab, and NPR make similar assessments, with online data including various demographic and geographic breakdowns. These populations make up the major part of essential workers, such as in grocery stores, public transit, and home health. They desperately need face masks and gloves. In many jobs, the workforce is overwhelmingly female and non-white. A host of socio-economic factors make these populations disproportionately susceptible including: an inability to work from home, limited savings for emergencies, and no sick or family medical leave. Diabetes and obesity pose similar challenges, as do structural deficiencies like limited health insurance or medical services. As such, public health and workplace advocates recommend PPE as essential for essential workers.

Many federal agencies regulate PPE. N95 and surgical masks fall under overlapping Centers for Disease Control, Food and Drug Administration, National Institute for Occupational Safety and Health, and HHS regulations. The agency that administers Section 301, the U.S. Trade Representative (USTR), aggravated supplies of vitally needed PPE. Like with many agencies, USTR determinations appear race neutral if not entirely removed from concerns of racial disparity, gender, or immigrants. 

One way to identify how administrative actions have racial consequences comes from the casebook “Race and Races: Cases and Resources for a Diverse America.” It suggests many “questions to guide”[1] the study of race. This post incorporates four of those questions: were there hidden objectives in the agency’s legal reasoning; what was the factual context during the law’s application; what harms were suffered by the voiceless; and who benefits from the legal determinations.  

USTR determinations resulted in expected outcomes: Americans paid more for imports, and domestic supplies decreased. USTR findings and notices indicate this. One objective stands out: to tax imports as part of a larger project to force changes in China. This prioritizes foreign policy and benefits domestic interests that lobbied for application of Section 301 to China. With these tariffs and others, the USTR operates with delegated authority, typically with minimal input from Congress. 

The USTR does not ask what happens when essential medical products are taxed and their inventories depleted, much less about their effects in a pandemic or on health disparities.

Despite procedural and notice-and-comment requirements, agency proceedings are not structured to look at these predictable consequences. Preparing its tariff list, the USTR asks whether increased duties on a specific product: help eliminate unfair economic practices and cause “disproportionate economic harm” to American interests. To exclude a product from its list, the agency asks is it only available from China, is it strategically important to Chinese industrial programs, and if added duties economically harm American interests. In theory, other agencies and the White House could have voiced concerns regarding public health readiness. 

USTR deliberations are predisposed to impose additional tariffs and overlook important context. PPE and medical supply producers predicted shortages and their impacts in emergencies. In 2018 testimony, the Health Industry Distributors Association (HIDA), asked that their products not face additional tariffs.[2] The next year, Medline Industries and HIDA requested exclusions from these taxes, after the USTR issued Section 301 tariff lists.[3] The agency permits this input too late and with limited attention, if any. USTR procedures to exclude certain goods from tariffs are not entirely clear and result in approving only 36 percent of these requests.      

In critical race terms, agency determinations are structured with an objective to tax and discount factual realities, such as public health consequences and the lack of alternative sources for needed products. In these proceedings, there is little hope for input regarding predictable racial disparities from shortages.     

Looking forward what this means: 

The known bad news: COVID surges before a second wave, “grave” PPE shortages persist, and China still dominates PPEproduction. Will the USTR consider COVID-related input seriously, when it extends tariffs? Not likely. This summer the USTR told Congress that it prefers tariffs for PPE. 

Could be good news: this year courts have found that agencies much comply with procedural requirements for similar tariffs.[4] A court panel stated that presidential tariff actions must strictly adhere to timeline restrictions. In another case, a judge found that the USTR must comply with notice-and-comment periods when determining to exclude additional tariffs or not. These rulings and another last year  that the Administrative Procedure Act applies to the USTR, suggest that courts are willing to be less deferential to the USTR in potential Section 301 disputes.

Better structural news: If the USTR or the White House changed Section 301’s implementation to identify who bears the economic burden of tariffs and how this impacts public health. Even better, if Congress required this.

Further listening:

America Dissected Viruses Don’t Discriminate People Do

Brookings Cafeteria Race and gender gaps in COVID-19 deaths

Trade Talks Coronavirus and Trade Restrictions

Ernesto Hernández-López is a Professor of Law at Chapman University Dale E. Fowler School of Law. Follow him on Twitter here.

[1] Richard Delgado, Jean Stefancic, Juan F. Perea, Angela P. Harris, Stephanie M. Wildman, 2015, p. 3-4.

[2] Matt Rowan, HIDA, USTR, 301 Committee, Section 301 Tariffs Public Hearing, Aug. 20, 2018, p. 386.

[3] Linda O’Neill, HIDA; Lara Simmons, Medline Industries, USTR, 301 Committee, Section 301 Tariffs Public Hearing, June 20, 2019, p. 191.

[4] These regard Section 232 national security tariffs, 19 U.S.C. § 1862, and Section 201 safeguard measure tariffs, 19 USC § 2251.

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