What medtech CEOs are saying this week about Trump's potential tariffs

During quarterly earnings calls across the medtech industry, a recurring question has been on investors’ minds: If President-elect Donald Trump implements his plans for blanket 10% to 20% tariffs on imported goods—and steeper rates for shipments from China—how will that impact supply chains, the delivery of healthcare and the bottom line?

Among eight companies covering various sectors, answers ranged from “we’ll wait-and-see” to “we’re prepared”—following years of global rebalancing in manufacturing in the wake of the COVID-19 pandemic. Still others described the issue as possibly problematic, but definitely top-of-mind.

“So the tariffs that we're talking about would be very much related to raw materials—to the chips that we still buy there, and other things that will impact the industry in general,” Baxter CEO Jose Almeida said Friday morning. “But we do not specifically make products in China for the U.S.”

Almeida also reported lower sales in China during the quarter, but said he does not expect that to affect Baxter in the future once the company completes the sale of its Vantive kidney care division. “It's remarkably different, the new Baxter versus the old Baxter,” he said.

Meanwhile, Solventum CEO Bryan Hanson pegged his company’s total business in China at a little over 5%. “Thinking about the tariffs, I think, first and foremost, we just need to see what actually happens here. I think everybody is going to kind of wait and see what happens,” Hanson said.

“The good news is, though—when I think about what we actually bring in from China—it's a relatively small number. And as a result of that, just given what we know, I really don't see tariffs as being a major impact to our business,” he said Thursday. “Now anything can change, but based on what I see today, I don't see it as a major impact to our business—which is a good thing, obviously.”

Daniel Carestio, CEO of Steris, said Thursday that its global contract sterilization business has recently seen “a lot of reshoring and front-shoring.”

“We've seen enormous growth in our Asia-Pacific region, particularly in Malaysia, where we've got a number of new builds that have come online over the last couple of years,” Carestio said. “A lot of the business located there has been more of a front-shoring operation… in anticipation of challenges that might or might not occur as it relates to China.”

BD CEO Tom Polen looked back to the previous Trump administration, and some of the tariffs that were imposed in 2018: “When we saw this dynamic that happened in the past, we didn't see significant impacts from that.”

“Just as a reminder, from a China perspective, our strategy has always been strong local manufacturing, in China for China,” Polen said on Thursday’s third-quarter call. “There's actually only one product that we export from China today, and it's quite small in the grand scheme of BD.”

“So as we go forward, that's something we'll certainly watch. But our strategy has been across the board—and particularly given the volumes that we talk about, when we're moving billions of units—our network is set up to serve local markets with heavy local manufacturing in many cases,” he added. “We're a very strong domestic manufacturer in the U.S. Obviously, many things in Europe are served out of Europe, etc.—but that's a space that we'll continue to monitor. But we did well navigating it the last time.”

However, Tandem Diabetes Care’s president and CEO, John Sheridan, said the company may have a bigger lift down the line.

“It’s definitely something we're thinking about. And it's obviously very early and we'll have to see where he actually goes with some of the commitments he's made while campaigning,” Sheridan said Wednesday.

“We have a wide supply chain that does cross into some of the Asian countries that could potentially be problematic. But we have the flexibility to move things as we need to,” he said. “And we have other mechanisms to offset expenses that may come in one market versus another.”

“So we’re definitely thinking about it; it's sort of top-of-mind right now. As we see things begin to become more specific, we can address it with various actions at that point in time.”

Siemens Healthineers’ president and CEO, Bernhard Montag, said the day after the U.S. election he does not “expect a major impact on demand or different healthcare policies.”

And regarding a potential “U.S.-versus-China situation,” Montag said the company was very well positioned with manufacturing locations on both sides of the Pacific. “We have a twin factory setup—so we can deliver from China to China, and we deliver to the U.S. from the U.S. and Europe.”

“What the impact of more tariffs [will be] when it comes to potential Europe and United States situations—and here, let me remind you that, despite [CFO] Jochen [Schmitz] and I maybe speaking with German accents—Siemens Healthineers is a company that has more employees in the U.S. than in Germany,” he said, pointing to stateside headquarters for its Varian, diagnostics and imaging segments. “So we are, from a trade flow point-of-view, much more balanced than people sometimes assume.”

Michael Sen, CEO of the German dialysis giant Fresenius, said Wednesday that “it’s way too premature as to what the agenda of the new president will be.”

“We have all heard the statements on tariffs and the like… Our key assumption would be that everybody is interested in ensuring high-quality, affordable care to the American people and to have access to high-quality medicine,” he said. “Now with President Trump coming into office again, it will probably be a different path—and maybe less onerous than by price setting, but more by competitions and markets.”

“And when I look at our footprint in the U.S., we are a key local player. We have invested over the course of the last couple of years, almost 1 billion euros in U.S. manufacturing and supply and delivery networks.”

“With that kind of logistics network, warehouses and hubs we have in the country—we don't have to catch up on that one. We are already there,” Sen said.

And the week prior to the election, on October 28, President and CEO Roy Jakobs said that Philips has been “working on making our supply chain resilient, to be prepared for scenarios that could evolve across the world.”

“It’s happening in multiple potential countries,” Jakobs said. “To go local-for-local in China—but also to regionalize our supply chain for North America—really helped us to be prepared for changes in goods flow around the world.”

“So we are now building three regional axes where we can supply from,” he added. “And that's also showing in the resilience of the current supply deliveries, and the lead times and the service we have.”

“We also have dual-sourcing introduced, with a lot of focus and progress made on that to be ready for any adjustments that we need,” he said. “Organizational agility also increased, based upon simplification. And I think that also helps us to turn quickly towards change if need be.”