Medical Device Stocks Fall on Tariff Hit

The medical device industry, a cornerstone of modern healthcare, is facing an unprecedented challenge. The Trump administration's recent tariff policies have sent shockwaves through the sector, causing stock prices to plummet and raising concerns about the future of medical innovation. The tariffs, which include a universal baseline tariff of 10% effective April 5, 2025, and higher individual tariffs on some U.S. trading partners effective April 9, 2025, are set to impact a broad array of materials necessary for healthcare delivery. This includes medical instruments, equipment, and supplies, which are essential for diagnosing, treating, and preventing diseases.

The impact of these tariffs is already being felt. Major medtech stocks, such as Intuitive Surgical, Boston Scientific, and Stryker, have had an especially rough week. Intuitive Surgical, the leading soft-tissue surgical robotics company, has seen its stock become especially sensitive to investor worries over a trade war with Mexico. Many of its surgical robotics instruments are made at its manufacturing plant in Mexicali, Mexico. Company officials acknowledged during a Jan. 23 earnings call that there could be a material impact if there are significant taxes on Mexican imports. ISRG shares are down more than 19% over the past month.

Boston Scientific, another major player in the medical device industry, has also been affected. The company's Investor Relations VP Jonathan Monson said during a Feb. 5 earnings call that tariff headwinds should be manageable because the company doesn’t have significant manufacturing or sourcing from Mexico, Canada, or China. However, out of more than $16 billion in revenue last year, about $1 billion came from China — with double-digit growth in the East Asian giant. Boston Scientific’s most recent annual report mentions competition in China from local medical device companies.

Stryker, the orthopedic and surgical device giant, has also acknowledged the risks associated with tariffs. After a breakfast meeting this week with senior Stryker management at the AAOS 2025 event in San Diego, Truist analysts said in a report that the company’s leaders think healthcare may be less of a focus for Trump administration tariffs. But Richard Newitter and his colleagues at Truist also said: “[Management] acknowledged tariffs on European goods could represent a risk to SYK given its production footprint there, with less exposure/risk to the [company] associated with tariffs affecting Mexico manufacturing.”

The medical device industry is not taking these challenges lightly. The medtech trade group AdvaMed has been lobbying the Trump administration for a medtech carve-out from tariffs, similar to the exemption provided by the industry from China tariffs during Trump’s first term in office. AdvaMed CEO Scott Whitaker stated, “Our statement Feb. 1 seeking a medtech exemption stands. We are concerned about any tariffs’ impact on the number-one medtech industry in the world — the U.S. — and the patients we serve. We are monitoring the tariffs’ impact on the medical supply chain and will share what we see with the administration.”



The American Hospital Association (AHA) and other industry groups have also been lobbying for exemptions, arguing that many hospital supply chains could not easily be reshored and that tariffs threatened the nation’s supply of “life-saving medications and supplies.” The AHA shares the administration’s goal of strengthening the domestic supply chain; however, that goal needed to be balanced against avoiding disruptions to patient care, said Akin Demehin, vice president of quality and patient safety policy for the AHA.

The push for exemptions is not just about protecting the industry; it's about protecting patients. The inclusion of medical devices in the Trump tariffs stands "in stark contrast to the historical pattern of strategic exemptions of lifesaving and life-sustaining devices," according to Morningstar analyst Debbie Wang. The AHA reiterated its call for exemptions, following requests from AdvaMed, one of the medical device industry’s largest trade groups, a day prior to exempt medtech companies from the tariffs.

The tariffs come at a time when the medical device industry is already facing significant challenges. The COVID-19 pandemic provided a huge boost to Abbott’s fortunes, thanks to the company’s rapid diagnostic tests. Although the company’s overall revenue is declining as the demand for the tests wanes, Abbott’s base business remains strong. In particular, Abbott’s FreeStyle Libre stands out as a key growth driver. It’s the top-selling CGM device in the world, with sales skyrocketing in the U.S. market.

The medical device industry is a critical component of the healthcare ecosystem, and the recent tariff policies by the Trump administration have raised significant concerns about the future of medical innovation. The industry is employing several strategies to mitigate the risks associated with tariffs, including lobbying for exemptions, diversifying supply chains, relocating manufacturing, and passing on increased costs to end-users. The long-term effectiveness of these strategies depends on various factors, including the administration's policies, the feasibility of relocating manufacturing, and the ability to pass on increased costs to end-users.

The medical device industry is at a crossroads. The recent tariff policies by the Trump administration have raised significant concerns about the future of medical innovation. The industry is employing several strategies to mitigate the risks associated with tariffs, but the long-term effectiveness of these strategies remains to be seen. The future of the medical device industry depends on the ability of companies to adapt to changing tariff policies and the continued advocacy for exemptions from tariffs. The stakes are high, and the industry is fighting for its future.