Overview

Discussions of tariff impacts on the US healthcare system often center on pharmaceuticals. However, tariffs on medical devices and supplies have equally significant implications for healthcare access and costs.

Medical devices are utilized in the diagnosis, treatment, or prevention of disease, encompassing a wide range of products from tongue depressors to pacemakers.[1] According to the FDA, 62% of medical devices utilized in the US are imported,[2] primarily from Europe, Mexico, and China.[3]

Depending on each country’s tariff rate, duties on medical devices range from 10% to 50%[4] and may rise further following the Department of Commerce’s Section 232 investigation, announced on September 24.[5] Tariffs on China—one of the leading medical device suppliers—are expected to take effect on November 10, once the administration’s 90-day tariff delay expires.[6]

Medical supplies include personal protective equipment (PPE), surgical tools, and other essential healthcare commodities. The US imports 80-90% of its PPE, making it the world’s leading importer, with 75% of PPE sourced from China, where production costs remain lower than in the US and other markets.[7] Medical supply prices have risen in recent years, particularly for hospitals that generally procure through bargaining conglomerates known as Group Purchasing Organizations (GPOs). Between 2022 and 2023, US hospital spending on medical supplies grew by $6.6 billion, from $140.3 billion to $146.9 billion. Supplies now account for approximately 10.5% of hospital budgets.[8]

Projected Impacts

Potential to Increase Healthcare Costs Long-Term

Medical supply and device manufacturers are expected to pass the added costs of tariffs to hospitals and insurers. With insurers facing new financial pressures, many will likely transfer these costs to beneficiaries in the form of higher premiums. While the magnitude of these increases remains uncertain, company projections suggest they could be significant. Johnson & Johnson’s MedTech division anticipates $400 million in additional losses if Chinese tariffs take effect,[9] while Siemens projects losses between $235 million and $350 million.[10] If these costs are passed to patients, Americans could face new barriers to accessing care. One industry leader observed that increased costs will likely be borne by taxpayer-funded health programs like Medicare, Medicaid, and the Veterans Health Administration.[11]

Potential to Strain Hospital Finances Short-Term

Although hospitals may eventually offset tariffs by passing costs to payers, pre-negotiated insurance contracts for FY-2025 prevent them from doing so until FY-2026.[12] In the interim, hospitals—many of which already operate with slim or negative margins—will bear the immediate financial burden, further straining their solvency.[13]

Potential to Shift Manufacturing Away from China

Tariffs aim to encourage changes in manufacturing location decisions. While medical technology and PPE companies are moving to reduce reliance on Chinese production, few intend to relocate manufacturing to the US. Instead, many are exploring markets with lower tariffs than China and lower labor costs than the US. Some companies are also shifting toward North America, where exemptions under the United States-Mexico-Canada Agreement (USMCA) offer additional incentives.[14]

Potential to Disrupt Supply Chains

Tariffs carry the risk of disrupting supply chains. Rising costs may push suppliers to reroute goods through countries with lower tariffs, leading to short-term shortages as new logistics networks are established.[15] Manufacturers moving production to new regions will require time to build facilities, hire staff, and secure supply networks, which could further delay product availability. Shortages of critical supplies undermine hospitals’ ability to deliver care and raise the risk of adverse health outcomes. Rick Pollack, CEO of the American Hospital Association, warned that disruptions in the availability of critical devices—many of which are sourced internationally—have the potential to disrupt patient care.[16]

Discussion

Federal tariff policy on medical devices and supplies presents a complex set of trade-offs. While the stated goal is to reduce dependence on foreign manufacturing—particularly from China—the immediate impacts may include increased costs for hospitals, insurers, and patients. Unlike the pharmaceutical sector, where major manufacturers have announced substantial domestic investment commitments, the medical device and supply industry appears more likely to relocate to other low-cost countries rather than reshore to the US. This pattern reflects the different economic structures of these industries: medical device and supply manufacturing operates on thinner margins than brand-name pharmaceuticals, making domestic production less financially viable.

The timing of cost absorption creates particular challenges. Hospitals will bear initial losses due to existing insurance contracts, while patients may face higher premiums and out-of-pocket costs beginning in 2026. The risk of supply chain disruptions adds further uncertainty, particularly for critical medical devices and PPE that hospitals depend on for patient care. As manufacturers adjust their supply chains and logistics networks, temporary shortages may occur, with potential implications for healthcare delivery and patient outcomes.