The North American Free Trade Agreement (NAFTA) has led to the transformation of Tijuana to become the world capital in the manufacture of medical devices.
The manufacturing units located in Tijuana manufacture millions of medical devices from intravenous bags to artificial respirators for the global market. Around 70% of the medical device manufacturing companies in Tijuana are American-owned including Medtronic, Carefusion, DJO Global, etc.
New taxes on imports are likely to increase the cost of medical devices in the US with companies keeping their major operations outside the country. The US imports of medical devices have more than tripled from 2001 to 2016 reaching USD43.9 billion, according to BMI Research.
Mexico purchases most of its raw material and capital machinery from United States. If America imposes the border tax, Mexico could impose a tariff on raw materials supplied from the US. This will lead to increasing production cost making companies to shift to lower cost suppliers affecting the American suppliers.
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