Today, Beijing announced a wide range of tariffs on US goods in response to the Trump administration’s 10% tariffs on Chinese imports.
China will start imposing the tariffs on 10 February, according to the Chinese ministry of finance, with a 15% tax on coal and liquefied natural gas and a 10% tax on crude oil, agricultural machinery, large-displacement automobiles and pickup trucks.
“The unilateral imposition of tariffs by the US side seriously violates the rules of the World Trade Organization and is not only not conducive to solving its own problems, but also undermines the normal economic and trade cooperation between China and the United States,” the Chinese ministry said.
Though these tariffs do not directly target medtech — at least for now — they certainly raise the stakes as Beijing’s pushback could signal a trade war that most analysts agree is in no one’s interest.
“We maintain that the potential supply chain disruption and its downstream effects on patients remain a risk, should tariffs be implemented.”
Scott Whitaker
In a recent blog, Joseph Brusuelas, chief economist at global consulting firm RSM, says the trade disputes with China, Canada and Mexico could have a “significant” impact on the US economy.
Though Trump recently announced a 30-day hold on implementing the tariffs on Canada and Mexico based on measures the White House says the countries took on border security and drug trafficking, both have threated their own retaliatory tariffs.
While he expects the rifts with Canada and Mexico — the biggest US trading partners, together accounting for about half of all imports — to be resolved in the near term, the dispute with China, Brusuelas says, will likely last longer.
“Growth will slow notably from the 2.9% average over the past three years as inflation and interest rates rise,” Brusuelas argues. “The yield on the 10-year Treasury, currently around 4.5%, could climb to a range between 4.75% and 5%.”
As he notes, approximately $1.3tn trillion in trade imports come from China, Mexico, and Canada, accounting for nearly 43% of US imports and 5% of the $27tn US gross domestic product.
Trump’s tariffs — a 25% levy on Canadian and Mexican goods and 10% on Chinese imports — will increase the average tariff rate from 3% to over 10%, Brusuelas says.
Medtech Concerns
Still, many stakeholders, including those in the medtech industry, remain concerned.
Citing worries the tariffs might lead to supply chain disruptions, increased costs, and the availability of medical devices, AdvaMed is asking Trump to exempt medical devices from China as he did during his first term.
“We share President Trump’s goal to protect public health, as well as his deep concern for the terrible impact drugs have on too many Americans and on our health care system,” says the trade group’s CEO Scott Whitaker. “This is also why we are concerned about tariffs on medical products from Canada, Mexico and China.”
In his statement, Whitaker references the carve-outs for medical technology in the tariffs Trump imposed during his first term and asks for a similar approach now.
Additionally, Whitaker argues that due to the regulatory and reimbursement structure of the medtech industry, the tariffs would stifle innovation and hurt bottom lines.
“Our industry is heavily regulated. FDA decides what products can be put on the market, and then Medicaid, Medicare, and the VA largely determine the reimbursement for procedures using medtech products,” he says. “This means tariffs impact American companies similarly to an excise tax, which would lead to less R&D/innovation, layoffs, higher prices for the above-mentioned payors and patients, or all of the above.”
“Make no mistake. If there are widespread tariffs, anywhere from the 10% to 25% range, I anticipate there will be corresponding price increases.”
Jason Hollar
Whitaker also points out the burden of relocating manufacturing operations from overseas, which requires FDA approval, thereby making it difficult for companies to adjust to US production in the short term.
“The increased costs posed by tariffs, and their functioning essentially as an excise tax in practice, could resurrect the climate of concern the medical device excise tax created for nearly a decade,” Whitaker argues. “We maintain that the potential supply chain disruption and its downstream effects on patients remain a risk, should tariffs be implemented. Shortages of critical medical technologies are a real concern in our initial modeling.”
Forecast: Pain
Some companies have echoed these concerns.
For example, New Zealand-based Fisher & Paykel Healthcare, which specializes in chronic respiratory care, is forecasting increased costs.
The company, which says it makes approximately 45% of its products in Mexico with more than half of its volume entering the US from Mexican facilities, expects those increases to hit in 2026.
Managing Director and CEO Lewis Gradon said the company is taking a long-term view and will work with global suppliers and US customers “to provide solutions to best mitigate the impact of the tariffs on all parties.”
Cardinal Health CEO Jason Hollar also addressed the potential downstream effects of the tariffs on customers during a recent January earnings call.
“We’ll continue to do what we can to minimize the impact as it relates to tariffs. But make no mistake. If there are widespread tariffs, anywhere from the 10% to 25% range, I anticipate there will be corresponding price increases,” Hollar told investors. “We think we’re well-positioned competitively to be able to pass on those price increases. So, it’s something we’ll work to minimize, but it’s going to be a reality if tariffs are widespread.”
But just how widespread the tariffs will be and how deeply they will hit is unclear. However, consumers would be wise to expect higher prices.
Even Trump said the tariffs would bring pain.
“We will make America great again and it will all be worth the price that must be paid,” Trump posted on Truth Social.
But whether Americans are willing to pay that price remains to be seen.
As Brusuelas says, trade wars, just like any other conflict, can spread.
“Should the trade skirmishes escalate to include the European Union and turn into an all-out trade war,” he warns, “expect US economic growth to ease back to 2% as the tariffs drag down growth and employment, stoke inflation and widen the current account deficit, all amid higher interest rates.”
