The Trump Administration has done a very good job of responding to the Wuhan coronavirus with daily press briefings and significant policy changes. We live in dangerous times and the government response has to be quick, substantial, and effective. Congress is actually working together to craft multiple pieces of legislation to respond to the crisis proving that partisanship can be slowed during a national crisis.
Despite the progress, some mistakes are being made. Mistakes are expected in a time of crisis, but if they are wholly avoidable – they should be avoided. One avoidable mistake that will both slow the Wuhan coronavirus response and hurt economic growth is a push by some in the Trump administration for a ‘Buy American’ drug mandate. Mandating that all drugs are made in America will slow the response to the global Wuhan coronavirus pandemic.
The ‘Buy American’ only drug idea may also put American lives in danger.
The idea of cutting off foreign production of drugs preceded the Wuhan coronavirus pandemic, yet some in the Trump Administration are using the crisis to push the idea even though they know the dangers. CNBC reported on March 16, 2020, that “White House trade advisor Peter Navarro told CNBC on Monday that he’s preparing an executive order that would help relocate medical supply chains from overseas to the U.S.” Any discussion or debate on a ‘Buy American’ effort to eliminate international supply chains for drugs is completely inappropriate during a time of national emergency.
The simple law of supply and demand dictates that when you have a massive demand for life-saving drugs that have to be imported, cutting off the supply imposes hardship on consumers while American producers ramp up. During this crisis, there will be unmet demand for life-saving drugs that are produced overseas while the U.S. increases production. There also will be a massive hike in domestic prices because it will take resources to get facilities up and running while hiring domestic workers to make the new drugs. This idea is not well thought out.
This is a completely unrealistic idea to ramp up production at a time where people in the U.S. are banned from showing up at work. How is the U.S. going to meet demand when the labor force is stuck at home trying to get past this pandemic? This idea is foolish on so many levels.
It is political and policy insanity to even consider this idea right now. The voters will impose a heavy political price on the Trump Administration if Navarro’s idea leads to drug shortages and people getting sicker. A policy disaster, because it will take a long time to get new facilities up to produce new drugs at a time when these facilities are being closed in states to stem the transmission of the coronavirus. Navarro is looking for an opportunity to force through his protectionist idea, but the cost could be huge to the economy and to the health of Americans who are stricken with illness during this time of crisis.
The executive order being pushed by protectionists would impact the production of essential medicines, medical supplies and ingredients for pharmaceuticals in the short term. This would disrupt supply chains, create shortages and result in a “Buy Chinese” or “Buy European” response from those nations hit with protectionism. We are experiencing a once in a lifetime public health crisis and this would impose a major change that our existing business infrastructure can’t handle right now.
Another complicating factor is that this will further throw Wall Street and global markets into turmoil. With this strain on markets, why would this be an appropriate time to throw the drug companies into a tailspin? If the United States, with the world’s largest economy, tries to use the crisis to expand protectionism and close off trade with nations producing the drugs that many Americans rely on to live day-to-day, that likely will cause even more problems and a likely recession, if not a depression.
It is a fact that global trade has improved the lives of all Americans. Cheap goods you can find in Target or Walmart would go away if the protectionists had their way. Inexpensive television sets and appliances would be a thing of the past. Limiting the source of treatments and vaccines to the U.S. right now will also cause many of the drugs that people need today to disappear because they are not being produced domestically. Ridding the U.S. of global trade right now will destroy the economy and put lives in danger.
Now is not the time to experiment with protectionist ideas at a time when cutting off the supply of needed drugs might hurt American citizens.