It was a busy week with tariff news.
First, on September 24, the US Department of Commerce shared that it opened two new National Security Surveys (PPE) and two new National Security Surveys on the imports of medical supplies, also known as Section 232 Survey, as well as robotics and industrial machinery.
These studies are potential tariff signals on these products, as they require companies to report how devices and their components “meet domestic demand.” The probe began on September 2nd, but was not published until last week.
Then the next day, the Trump administration announced in the Truth Social Post that 100% tariffs would come for certain imported drugs unless the parent company begins to build facilities in US soil by October 1st. (President Donald Trump said in August that it could reach 250%.)
As announced, there are no specific tariffs on MedTech or Pharmaceuticals, but there are 57.6% for products from China and 20.8% worldwide. The Professional Supply Chain Organization, the Association for Medical Resources and Materials Management reported that these tariffs could increase hospital costs “at least 15%.”
“At the end of the day, tariffs are essentially taxes on vulnerabilities. Without wise exemptions and fast investments in domestic capabilities, there is a risk of raising today's prices without actually protecting tomorrow's supply.”
Medical equipment. Mergers and acquisitions (M&A) in the MedTech industry have been declining so far this year, according to investment firm PMCF.
The managing director of PMCF Bryan Hughes told Healthcare Brew that this could connect to the “uncertainty” of tariff-related markets.
“Taxes are clearly everywhere. What we saw is that they really pause a lot of discussion about potential M&A activities and other investments,” he said.
Healthcare Brew covers drug development, health startups, the latest technologies, and how it will impact hospitals and providers and keep administrators and providers informed.
Hughes said he is looking to see how Section 232 affects the market, but believes that activity remains slow amidst the uncertainty. Otherwise, he keeps his eye on mostly imported products such as gloves, masks, and gauze.
“I don't think anyone knows what happens with tariffs,” he said, but “there is much less room to absorb some of that cost pressure” from PPE, which is used daily compared to medical devices.
Pharmaceutical. According to the Bloomberg Act, tariffs on these receiving drugs could affect $229 billion in drug imports into the United States.
Leading biotech companies such as Johnson & Johnson, Eli Lilly and GSK are dealing with tariffs by announcing new investments in US manufacturing facilities. Pfizer also announced its contract with the Trump administration on September 30, offering discounted drugs in exchange for three years of exempt tariffs, as long as the manufacturer continues to manufacture in the US.
However, Barodia said reusing the facility is a long process. Obtaining FDA verification for a new drug facility could be a “multi-year effort,” and the benefits of that “do not come immediately,” he said.
Barodia expects the prices of branded drugs will be affected by tariffs, but not as much as generic drugs. He forecasts more market integration and M&A as a result.
“Incremental tariffs (for generics) can have very immediate effects. There is not enough margin to absorb such shocks,” he said.
Otherwise, Barodia said he believes tariffs will encourage the adoption of the technology due to “labor premiums” by supervisors.
However, he added that medicines “can't afford to sit down.”
“They should map where tariffs collide, share cost burdens with suppliers, build safety stocks for 60-90 days, and apply for exemptions if possible,” he said.
