Sweeping tariffs imposed by President Donald Trump April 2 have triggered concern across the healthcare sector, particularly among hospitals and industry leaders, as they brace for cost increases and potential supply chain disruptions.
Starting April 5, the U.S. imposed a baseline 10% tariff on all imports, with additional tariffs on dozens of trading partners set to take effect April 9. China will face a 34% total tariff, India is subject to a 26% tariff and the European Union is subject to a 25% tariff.
The tariffs come after the U.S. imposed a 20% tariff on all Chinese imports in early March. On April 7, President Trump also threatened to add an additional 50% tariff if China does not rescind its plan to impose a 34% retaliatory tariff on U.S. imports. The escalation could bring the total tariff on Chinese goods to 104%.
Canada and Mexico were not among the listed countries facing additional tariffs, The New York Times reported. Pharmaceuticals were also not included in the “reciprocal” tariffs for now. However, pharmaceuticals are not exempt from recent U.S. tariff policies which introduced a universal 10% on imports. Additionally, the Trump administration is weighing a Section 232 investigation that could lead to future tariffs on pharmaceutical imports.
“The pharmaceutical companies are going to come roaring back because if they don’t, they’ve got a big tax to pay and if they do, I’ll be very happy,” President Trump said.
Hospitals brace for cost increases
Renton, Wash.-based Providence Health estimates that the tariffs could increase costs by $10 million to $25 million annually after evaluating their potential impact on access to life-saving medical supplies and equipment.
“We are hopeful that measures will be taken to exempt vital medical supplies and equipment and ensure the impacts on health care are minimized,” Providence CEO Erik Wexler said in a statement to Becker’s. “The healthcare supply chain is fragile. We saw this during the pandemic when masks, ventilators and other products were in dangerously short supply. We welcome measures that help diversify and secure the U.S. health care supply chain, including more domestic manufacturing. It’s also important to note potential cuts to Medicaid on top of tariffs will cripple health systems across the country which could create a national emergency in terms of access to healthcare.”
A January survey of 200 healthcare industry experts found that 82% expect tariff-related import expenses to drive up hospital and health system costs by 15% within the next six months.
Nearly 70% of respondents predicted at least a 10% spike in pharmaceutical costs, driven largely by U.S. dependence on Chinese imports for active pharmaceutical ingredients. Ninety-percent of hospital supply chain professionals also reported they anticipated major procurement disruptions and 94% of healthcare administrators said they plan to delay equipment upgrades to help manage financial strain.
The threat of future tariffs on pharmaceutical imports is alarming patients and pharmacists, CBS News reported April 4. In Nevada, where generic prescription usage is widespread, patients are growing concerned that rising costs will force them to ration essential medications.
ING Bank projects tariffs could increase the cost of common heart medications by 15% and some cancer drugs by as much as $10,000 for a six-month supply.
Industry warns of drug shortages, seeks medical exemptions
The American Society of Health-System Pharmacists cautioned that while increasing domestic manufacturing can be a good way to reduce dependency on other countries for supply, the current tariffs could lead to more drug shortages, especially for generic drugs.
“The main patient care concern is that you see a shortage of particularly generic drugs and in a hospital setting. Hospitals are particularly dependent on sterile, injectable, generic drugs, as those tend to be very low cost, very thin margin products, so they’re more susceptible to shortages,” said Tom Kraus, ASHP vice president of government relations. “Because of that, we view risk of a supply chain disruption or a shortage as the most immediate patient care risk — less so the cost implications.”
Mr. Kraus also explained that many key starting materials, or chemical ingredients essential to drug manufacturing are not exempt from the tariff policy and could drive up the input costs for U.S.-based manufacturers who already operate on thin margins and could be forced to exit the market.
The American Hospital Association said it supports the administration’s goal of strengthening domestic supply chains but raised concerns that new tariffs could disrupt access to essential medical devices and supplies hospitals rely on.
“We appreciate that the administration has exempted pharmaceuticals from reciprocal tariffs. However, we strongly urge the administration to consider tariff exemptions for medical devices. It is especially critical to have exceptions for medical products already in shortage and for which production in countries subject to the increased tariff supplies a significant part of the U.S. market,” said Rick Pollack, president and CEO of AHA in a statement shared with Becker’s.
America’s Essential Hospitals warned that the tariffs could raise costs, placing a financial strain on hospitals and could threaten access to care in underserved areas. The organization also called for tariff exemptions on essential medical devices and pharmaceuticals.
“We request that medical equipment, supplies and pharmaceuticals be made exempt from tariffs to protect hospitals’ ability to ensure timely and appropriate access to care and improve health outcomes for Americans,” said Beth Feldpush, DrPH, senior vice president of policy and advocacy at America’s Essential Hospitals.
