One year after President Donald Trump’s “Liberation Day” tariff announcement triggered a new phase of U.S. trade disruption, medtech companies are still dealing with the consequences.
The tariff program, introduced in a White House Rose Garden ceremony on April 2, 2025, targeted imports from major U.S. trading partners including China, Mexico, Canada and the European Union. While the objective was to stimulate domestic manufacturing, the medical technology sector has largely responded in a different way.
Unlike parts of the pharmaceutical industry and other sectors now investing heavily in new U.S. production sites, medtech companies have generally not embraced large-scale reshoring as their primary answer. The reason is structural: medtech depends on complex, globally integrated supply chains built over many years for efficiency, quality and regulatory compliance.
Instead of passing the cost of tariffs on to hospitals and health systems, or making deep cuts to R&D, many companies have focused on finding savings elsewhere in the business.
According to Glenn Hunzinger, PwC’s U.S. health industries leader, the sector is largely absorbing the pressure and doubling down on operational efficiency. In his words, companies have had to look for levers elsewhere rather than simply pushing higher costs onto customers.
PwC estimates that medtech companies could receive as much as $2.6 billion in refunds for duties collected under the International Emergency Economic Powers Act (IEEPA), following the Supreme Court’s February ruling that the president lacked authority under that statute to impose tariffs.
Even so, the financial effect remains significant. Hunzinger says that for some of the largest medtech companies, annual tariff-related impacts on earnings are running between $200 million and $500 million.
The pressure has therefore shifted from being a short-term shock to becoming a standing operational constraint. Most companies, he notes, have already undertaken some form of cost-reduction effort and are expected to continue doing so in order to keep tariff costs from eroding profitability.
To replace the original IEEPA tariffs, the administration moved quickly to use Section 122 of the Trade Act of 1974, imposing a broad 10% tariff on imports. That provision allows a president to apply tariffs of up to 15% for up to 150 days to address trade imbalances. At the same time, the U.S. launched new investigations under Section 301 that could later result in longer-term duties if trading partners are found to be restricting U.S. commerce unfairly.
Analysts say that this rapid shift from one legal mechanism to another shows that tariffs remain a central part of the administration’s economic strategy. As Shagun Singh of RBC Capital Markets put it, the administration is likely to find one route or another to keep tariffs in place.
Despite those changes in legal structure, the practical cost to device makers has not changed much. Mike Matson of Needham says that from what he has heard from companies, the overall impact has been something of a wash.
The sector is also facing scrutiny under a Section 232 investigation into whether imports of medical devices—including PPE, medical consumables and equipment—pose a national security risk. That inquiry has been hanging over the industry since September, but Singh does not believe it is likely to become a major new tool for adding tariffs to device imports. In her view, medical devices are not a sector the administration is especially targeting in a negative way.
Industry group AdvaMed has argued for a more tailored tariff approach, warning that blunt measures could create unintended risks for healthcare providers and patients by undermining trusted supply networks.
Analysts broadly agree that tariffs hurt gross margins in 2025 and will continue to do so in 2026. However, they also say the impact has remained manageable. There have not been widespread layoffs or major reductions in R&D, and for many device makers, growth in hospital activity and procedure volumes remains the more important driver of revenue performance.
Singh is clear on one point: R&D is the last thing companies want to cut, because they are still managing their businesses with a long-term view. Matson likewise describes the effect of tariffs on most medtech companies as modest rather than transformational, noting that many still grew earnings last year despite the headwind.
To mitigate the pressure, companies are becoming more sophisticated in how they respond. Christopher Young, principal in the trade and customs practice at KPMG US, says medtech organisations are using tariff modelling tools to identify savings opportunities, reviewing materials, optimising logistics, and where possible, securing alternative suppliers.
He notes that life sciences leaders increasingly treat variables such as tariffs, interest rates and political uncertainty as expected operating conditions rather than exceptional shocks. In that sense, these risks are now being absorbed into normal strategic planning.
Mitigation strategies include identifying available tariff exemptions—for example for prototypes or devices used to treat chronic or permanent conditions—revisiting product design decisions, and assessing whether supplier changes are possible within regulatory limits.
Young says the market is seeing targeted shifts, not sweeping relocations. Simpler, lower-cost products have been easier to move toward lower-tariff sourcing regions. But for complex devices relying on specialist components, precision materials and electronics, supplier changes are far more difficult because of regulatory and technical constraints.
Some companies are spreading production across multiple geographies and developing secondary supplier relationships. There has also been some growth in domestic manufacturing, particularly where technical collaboration or regulatory familiarity offers an advantage, though not at a scale large enough to replace established global networks.
In many cases, where costs cannot be fully offset, companies are simply absorbing part of the additional burden in order to protect access to the market and preserve customer relationships—especially for products that are critical to patient care.
Looking ahead, Young advises medtech companies to closely monitor both the Section 232 investigation on medical products and the Section 301 investigations, because these rest on firmer legal ground. Given the sector’s dependence on imported high-precision materials and components, even narrow policy changes could have disproportionately large effects.
Arun Venkataraman, partner at Covington, notes that because medical devices are being treated separately under the Section 232 review, the administration will eventually need to decide whether to exclude them from future Section 301 tariff actions.
He also points to possible parallels with the recent Section 232 decision on pharmaceuticals, concluded last week, which exempted certain companies that had committed to increasing U.S. manufacturing and agreed to most-favored-nation pricing. In his view, similar negotiated relief could eventually be considered for medtech companies willing to invest in the U.S.
Venkataraman adds that medtech companies importing chemicals, reagents and other related products should also study the pharma Section 232 outcome closely. He further highlights new rules on steel and aluminum, revised last week, as well as country-specific trade arrangements such as the U.S.-China trade truce, the EU trade deal, and the ongoing review of the United States-Mexico-Canada Agreement.
His conclusion captures the challenge clearly: medical device manufacturers are now operating in a mosaic of tariffs that they must constantly navigate.
