US President Donald Trump on Sunday announced that the reciprocal tariff that he will announce this week will include all nations, beyond just a smaller group of 10 to 15 countries.
He also said that he will announce a massive tariff plan on Wednesday, which he has dubbed “Liberation Day.” He has already imposed tariffs on aluminum, steel and autos, along with increased tariffs on all goods from China. The president also said that he will impose a suite of reciprocal tariffs against nations that charge fees on U.S. exports, promising to match those countries’ duties.
Reportedly, the medical device companies are taking a “wait-and-see” approach to tariffs. It’s possible medical devices — and the components to make them — could be exempt. Intuitive Surgical (ISRG) and Becton Dickinson (BDX) are exposed to the tariffs on Mexico. Illumina (ILMN), Exact Sciences (EXAS), Mesa Laboratories (MLAB), Revvity (RVTY), Waters (WAT), Stryker (SYK), Zimmer Biomet (ZBH) and Hologic (HOLX) have noted a “minimal” impact due to tariffs on imports from Mexico and Canada, as per media reports.
How the tariffs will affect the US?
Advamed, one of the medtech industry’s largest lobby groups, has called for a tariff exemption for medical devices and supplies, noting Trump excluded certain medtech imports from China during his first term, MedTech Drive reported.
Reportedly, the American Hospital Association (AHA), an industry group for health facilities, also urged the administration to exempt medical devices from tariffs, saying that disrupting the flow of common medical supplies such as needles, syringes, pulse oximeters, anesthesia instruments and blood pressure cuffs from China could interfere with surgeries and the diagnosis and monitoring of patients.
Medical Device Network data reveals that the majority (69%) of U.S.-marketed medical devices are manufactured entirely outside of the United States. A large amount of everyday medical supplies, from blood pressure cuffs to sterile drapes, comes from China.
A Forbes report revealed that the bigger challenge may actually come in the 25% tariff on Mexican imports. Mexico has grown rapidly in medical device manufacturing with its lower wages and lower manufacturing costs. Mexico is seventh in the world for medical exporting and is the top exporter of medical goods to the United States. This includes everything from ultrasound machines to infusion pumps. Maquiladora zones are thriving with Mexico, creating $13.7 billion in healthcare exports.
This supply chain impact will put pressure on your private physician, hospital and surgery centers, which will be passed on to patients and insurers, as per Forbes.
Another 2024 report by GlobalData revealed that US President-elect Donald Trump’s plans to impose tariffs on imported goods will affect the prices of approximately 75 per cent of available US-marketed medical devices, which are manufactured out of the country.
More specifically, the move will affect the 69 per cent of available US-marketed devices that are manufactured solely outside of the US, according to Medsource Database.
GlobalData estimates that the US medical equipment market was worth $197.8 billion in 2023 and is projected to reach $305.1 billion in 2033 with a compound annual growth rate (CAGR) of 4.3 per cent.
According to GlobalData, Trump’s additional proposition to impose 60 per cent tariffs on all Chinese imported products is likely to cause significant disruptions in the supply chain and will affect approximately 13.6 per cent of the total US-marketed medical devices, which are currently manufactured in China.
“Companies that have heavily invested in foreign manufacturing and produce 100 per cent of their products abroad, such as L&K Biomed, are likely to be affected by these policies, while companies such as Becton Dickinson, which only manufactures an estimated 12 per cent of its products abroad, can expect to be in a more secure position in the US market,” the data and analytics company stated.
Hospital supplies, diagnostic imaging and anesthesia, and respiratory devices are the most common types of medical devices imported to the US; therefore, these types of products are expected to be significantly impacted, it added.
What is the status in India?
Last week, CNBC-TV18 reported that Officials from the Prime Minister’s Office (PMO), the Ministry of Commerce, and the Ministry of External Affairs (MEA) are in active discussions to consider tariff reductions on select imports from the United States.
While the discussions are still evolving, some of the key product categories that could see lower basic Customs duties include:
- Medical & Scientific Instruments (Currently 7.5%-10%)
- Cruise Ships (Currently 10%)
- Aircraft (Currently 2.5%)
- Spacecraft (Currently 10%)
- Cars (Currently 100% for CIF value above $40,000, 70% below this threshold)
- Turbo Jets/Propellers (Currently 7.5%)
- High-End Jewellery (Currently 20%)
- Gems & Jewellery (Currently 20%)
- Footwear (Currently 35%)
- Plastic Polymers (Currently 7.5%-15%)
- Organic Chemicals (Currently 7.5%)
On Thursday, Association of Indian Medical Device Industry (AiMED) applauded the Government of India’s landmark decision to make the Export Promotion Council for Medical Devices (EPCMD) functional.
The Medical Devices exports are currently at over 31672 Cr Rs (3.7 Billion Dollar) with a healthy fast paced growth of 14% over the previous year. The top five Countries India currently exports medical devices are to USA, Germany, China, Netherlands and Brazil .
“The creation of EPCMD is a pivotal step toward recognising medical devices as a core pillar of India’s health and manufacturing ecosystem. It is expected to open up significant economic and employment opportunities, and accelerate the vision of ‘Atmanirbhar Bharat’ in the medtech space,” AiMED stated.
Earlier this month, economic think tank GTRI said that India should seek reciprocal concessions from the European Union (EU) under the proposed free trade agreement (FTA) in the medical devices sector to promote its exports.
India charges zero to 10 per cent tariffs on most medical devices and a duty cut by India on medical devices without addressing EUs regulatory challenges will result in low exports but large scale imports from EU.
“To achieve a fair trade deal, India must demand reciprocity. India should cut tariff on medical devices only if the EU reduces its non-tariff barriers,” the Global Trade Research Initiative (GTRI) said.
According to a Business Standard report, the ongoing India-EU FTA negotiations on medical devices are asymmetrical. GTRI Founder Ajay Srivastava said the EU customs duty rates are zero, but market entry costs are substantial because of the stringent regulatory framework.
“Exporting to EU has become more difficult as it replaced the Medical Device Directives (EU-MDD) with the more stringent Medical Device Rules (EU-MDR),” he said as quoted by Business Standard.
In 2024, India’s global exports were USD 2.3 billion while imports were USD 4.7 billion. EU remains an important market with exports of USD 580 million and imports of USD 1.15 billion.
Earlier this months, a report by Economic Times revealed that The government may offer easier market access for US medical device companies to mitigate the potential impact of the US tariff threat on Indian exports and create leverage in trade negotiations.
However, AiMED voiced concern stating that such a move will give “undue advantage” to foreign players and requested the government to have a rethink on the matter. The industry body made the request after the ministry of commerce asked the export promotion council to find ways to provide better market access to US device makers.
As previously reported by Financial Express, Indian companies pay huge NTBs in the forms of exorbitant US FDA registration fees and the requirement for costly clinical trials.
India levies 5-10 percent import duty on medical devices from the US, while the US doesn’t charge any import duty on devices from India. The top 10 items in the medical devices category, which are imported from the US include Magnetic Resonance Imagining (MRI) apparatus, artificial joints, gas analysis apparatus, computed tomography apparatus, apparatus based on use of X-Rays and radiography, radiotherapy apparatus, orthopaedic or fracture appliances, surgical forceps and forceps clamps, among others, Economic Times reported.
India imports consumables, disposables, electronic equipment, implants, IVD Reagent, surgical instruments from various countries including the US, China, Germany, Singapore and the Netherlands.