Trump’s Tariffs Threaten to Disrupt Healthcare Supply Chain and Increase Costs

Trump's proposed 60% tariff on Chinese imports would affect 75% of U.S. medical devices, potentially leading to price increases and supply chain disruptions1.

Approximately 69% of U.S. marketed medical devices are manufactured solely outside of the U.S., making them subject to the new tariffs1.

The tariffs could exacerbate existing drug shortages and raise healthcare costs for patients, according to drug trade groups2.

Generic drug manufacturers, operating on low profit margins, may be forced out of the market due to increased costs, potentially worsening drug shortages2.

China is a major supplier of active pharmaceutical ingredients (APIs) for both brand-name and generic drugs, making the pharmaceutical industry vulnerable to tariffs24.

Medical device companies and hospitals rely heavily on imports for components and finished products, with many sourced from countries like China, Mexico, and India2.

The Healthcare Distribution Alliance warns that tariffs could strain the pharmaceutical supply chain and adversely affect American patients through increased costs or manufacturers leaving the market2.

Estimates suggest that long-term prices of pharmaceutical products in the U.S. could be 1.1% higher after shifts in the supply chain2.

For the 10 largest medtech companies in the United States, more than half of their suppliers are based outside of the U.S., with 8% of those supplier locations in China5.

The U.S. imported $224 billion worth of medical equipment and pharmaceutical preparations through September 2024, a 16% increase from the same period in 20235.

Sources:

1. https://www.beckershospitalreview.com/supply-chain/trump-tariff-plan-would-affect-75-of-u-s-medical-devices-4-notes.html

2. https://www.nbcphiladelphia.com/news/business/money-report/trump-tariffs-could-raise-medication-costs-and-exacerbate-shortages-drug-trade-groups-warn/4097675/

4. https://www.biospace.com/policy/trumps-tariffs-threaten-big-pharma-with-higher-costs-and-slimmer-margins

5. https://realeconomy.rsmus.com/tariff-discussions-in-health-care-and-life-sciences-industries-stoke-global-supply-chain-concerns/