The Trump administration has imposed a plethora of tariffs for nearly all U.S. imports, with higher tariffs being placed on countries including Canada, Mexico and China.
While the lasting effects of the tariffs remain to be seen, their implementation carries hefty implications for the U.S. healthcare industry and it’s related supply chains, particularly for the availability and costs of medical supplies and medication.
Here are 10 updates on how President Trump’s tariffs may impact the healthcare industry:
1. While pharmaceuticals are exempt from the tariffs, according to an April 8 report by the American Journal of Managed Care, the ingredients and materials for drugs and medical devices are not.
2. In 2022, the U.S. imported $168 billion worth of pharmaceutical products, the most of any country in the world according to the American Medical Manufacturers Association. This, combined with the fact that China produces more active pharmaceutical ingredients than any other country, for both generic and brand name drugs, poses a significant threat to the U.S. pharmaceutical industry, healthcare providers and patients.
3. “Generic manufacturers simply can’t absorb new costs,” John Murphy III, president and CEO of the Association for Accessible Medicines, said in a statement. “The overall value of all generic sales in the U.S. has gone down by $6.4 billion in five years, despite growth in volume and new generic launches. Tariffs would make this much worse.”
4. According to a report from The Budget Lab at Yale University, the price for basic pharmaceuticals is estimated to rise by nearly 5% due to reciprocal tariffs.
5. Medical devices and supplies are another key subsector of healthcare to watch amid the tariff rollout, as many of these products are imported from countries including Canada, Mexico and India. This will impact items used daily across healthcare settings such as gloves, gowns, syringes and X-rays.
6. Mexico, in particular, has recently seen significant growth in medical device manufacturing. Mexico is seventh in the world for medical exporting and is the top exporter of medical goods to the United States, Forbes reported in March.
7. In February, Scott Whitaker, president and CEO of AdvaMed, the largest medical device association, said in a statement that the FDA heavily regulates the industry and makes final decisions regarding which products can be brought to market. Medical technology products play a hefty role in reimbursement, including those that go through Medicare, Medicaid and Veterans Affairs.
8. Beyond AdvaMed, several other industry trade groups, such as The Healthcare Distribution Alliance and the Association for Accessible Medicines, have pushed for exemptions of medical products from tariffs and are promoting policies that encourage domestic manufacturing to strengthen the healthcare supply chain. But establishing new facilities for domestic manufacturing presents challenges, including higher costs and extended timelines, according to AJMC.
9. According to Forbes, the tariffs are overall expended to shrink the U.S. economy, which could indirectly impact healthcare delivery. Currently, 143.2 million individuals receive their health insurance or subsidies for health coverage through the government, encompassing approximately 45% of total healthcare spending, with the rest covered by private businesses. “An economic downturn will inevitably lead to a decline in healthcare delivery,” according to Forbes.
10. In the first Trump administration, tariffs imposed on Chinese imports did not apply to the majority of medical devices. According to an April 16 report by CNBC, the medical product manufacturing community remains divided on the issue, with domestic producers applauding the president for his attempt to “level the playing field.” However, consultants at Pricewaterhouse Coopers and Boston Consulting Group say manufacturers are looking to switch production to lower-tariff countries, more so than bringing production back to the U.S.
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