Dive Brief:

• President Donald Trump late Friday called off a proposed 5% tariff slated to take effect Monday on imports of goods from Mexico after an agreement was reached to stem migration to the U.S. at the border.
• AdvaMed earlier in the day had urged that talks between the two countries continue in hopes of preventing implementation of the tariffs on medical products.
• U.S. direct imports of medical technology from Mexico topped $12.6 billion in 2018, and device components add hundreds of millions more to the total, AdvaMed said in a letter addressed to U.S. Trade Representative Robert Lighthizer on Friday.

Dive Insight:

After a week of high-stakes talks between U.S. and Mexican officials following the surprise 5% tariff threat, Trump announced via Twitter the signing of an agreement with Mexico aimed at stopping illegal border crossings.

Facing tariffs set to rise incrementally to as much as 25% by Oct. 1, medtech companies with manufacturing facilities in Mexico and that source raw materials or components from the country could have taken a hit. A number of leading device makers operate plants in the country, including Medtronic, Intuitive Surgical, Baxter and others.

With the potential for an imminent trade war with Mexico averted, the focus returns to broader negotiations over the United States-Mexico-Canada Agreement (USMCA), the deal crafted to replace the North American Free Trade Agreement. In AdvaMed’s letter to Lighthizer, Chief Executive Scott Whitaker expressed concern that the tariffs would undermine efforts to encourage Congress to pass the agreement. AdvaMed is a strong supporter of the USMCA, Whitaker noted in the letter.

The medtech industry stands to gain from passage of the USMCA on a number of fronts. The pact is expected to boost trade in medical devices, AdvaMed has said previously. An executive with the group told MedTech Dive in April that the agreement would address nonalignment of certain regulatory practices that now results in costly inefficiencies for industry.

An International Trade Commission report released in April highlighted potential benefits to the medtech industry from USMCA’s provisions on intellectual property rights, which would aid device makers by strengthening protections for trade secrets, patents and administrative enforcement.

More positives include sections on improving customs and trade facilitation, reducing technical barriers to trade, implementing anti-corruption provisions, specifying best practices for product approvals, and increasing transparency and procedural fairness for reimbursement.

In a statement released Friday, the U.S. State Department said Mexico committed to deploying its National Guard to curb migration from Central America through Mexico to the United States. Mexico also is expected to take actions to dismantle human smuggling and trafficking organizations. The State Department said the United States will expand its program to return asylum seekers to Mexico quickly to await processing.