Medical device manufacturers are grappling with uncertainty as President Donald Trump’s latest tariff initiatives create ripples through their global supply chains. The industry faces potential disruption from Trump’s announcement of 25% tariffs on Canada and Mexico – though temporarily postponed for one month – along with an implemented 10% tariff on Chinese imports and threatened levies on European Union goods.
Supply chain experts indicate these measures could prove costly for medtech companies, particularly given the unclear duration of any tariffs targeting China, Mexico, and Canada. The sector’s heavy reliance on international sourcing means that even U.S.-based production often depends on raw materials and components from abroad.
Harvard Business School professor Willy Shih emphasizes that severing these international dependencies cannot happen quickly, noting that businesses require certainty for effective planning. The medical technology industry’s primary trade group, Advamed, has requested exemptions for medical devices and supplies, warning that the tariffs could reduce research investment, trigger job losses, inflate costs for healthcare providers and patients, and potentially create shortages of essential medical technologies.
The American Hospital Association has joined these concerns, highlighting how disrupted access to common medical supplies from China – including items like syringes, pulse oximeters, and blood pressure monitors – could impact surgical procedures and patient care.
While some manufacturers have already begun diversifying their production beyond China to countries such as Vietnam, Thailand, Malaysia, and Mexico in response to previous trade tensions, challenges remain. China continues to serve as a crucial hub for electronics manufacturing, producing essential components for medical devices like monitor displays and glucose meter assemblies.
The situation is further complicated by Mexico’s established production capabilities in areas where U.S. manufacturing has declined, such as high-volume printed circuit board production. Shifting manufacturing back to the U.S. presents significant hurdles, primarily due to higher labor costs, which would require either premium pricing or extensive automation to maintain profitability.
BDO consultant Ashley Hetrick notes that while U.S. manufacturers have increased capacity for medical consumables since COVID-19, much of this expansion occurred in Canada and Mexico. The potential for retaliatory tariffs from trading partners could make it harder to sell U.S.-manufactured items internationally, possibly pushing buyers toward European alternatives.
Companies are exploring ways to maximize their domestic manufacturing capacity through additional production lines and extended operating hours. However, they face competition from other industries, including semiconductor, automotive, and aerospace sectors, which are also seeking to expand U.S. operations.
The uncertain trade environment may have broader implications for the medical device industry’s future development. Hetrick expresses particular concern about potential cuts to research and development spending, as companies might reduce innovation investments to offset increased costs from tariffs.
As manufacturers navigate these challenges, many are examining their supply chains and considering various strategies to maintain competitiveness. However, the industry faces a complex balancing act between managing costs, maintaining quality, and ensuring reliable supply of critical medical devices and components. With healthcare providers already pushing back against price increases, medical device companies must carefully weigh their options for adapting to this evolving trade landscape.