The hospital supplies sector is set to incur significant losses due to tariffs being imposed by US President Trump. The tariffs are expected to affect as much as 78% of all 510(k)-approved (cleared for marketing in the country by the US Food and Drug Administration under its 510(k) programme), hospital supplies that are manufactured outside of the US. More precisely, this will have direct consequences for the 66% of 510(k)-approved hospital supplies that are manufactured solely outside the US, according to MedSource, which collates data on the medical device supply chain. Tariff increases are likely to have significant effects across all major medical device sectors, but the hospital supplies sector in particular has large quantities of products manufactured abroad, making it riskier compared to other sectors.
Trump’s latest move to impose tariffs as high as 145% on China is sure to cause further price increases in this sector, as China manufactures around 27% of the 510(k)-approved hospital supplies products and solely manufactures 22% of all 510(k)-approved hospital supplies. This is expected to hurt companies in the hospital supplies space such as Medline, which manufactures a large portion of its devices in China. Companies such as Steris, that manufacture primarily in the US, may be in a more stable position.
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GlobalData estimates that the US hospital supplies market was worth $25.1 billion in 2023 and is projected to reach $41.4 billion in 2033 with a compound annual growth rate of 3.3%. This projected growth may be hindered due to supply chain disruptions caused by tariff hikes, which will also inflate consumer costs created to make up for losses from these fees. As a result, the accessibility of these devices will be reduced and demand will exceed supply, further increasing prices. The impact of retaliatory tariffs from foreign countries is also expected to cause losses for US medical device exporters, putting pressure on manufacturers, which may decrease foreign investment and negatively impact prices domestically.
The US medical device market heavily relies on imports from foreign manufacturing, and any drastic changes in trade policy may have significant impacts on the cost of consumer pricing and the supply chain, leading to reduced accessibility of vital products. This is particularly so in the hospital supplies market. The ongoing trade war presents a clear risk to medical device manufacturers that produce devices primarily abroad, and in future they may look to mitigate this risk; however, the immediate losses incurred by tariffs in the short term will be hard to avoid.
