Business already are trying to pass tariff cost onto customers, Fed report says

Business already are trying to pass tariff cost onto customers, Fed report says

In response to the escalating trade tensions and the imposition of new tariffs by the U.S. government, businesses are increasingly passing the cost onto consumers, according to a recent report by the Federal Reserve [1]. This development comes amidst a backdrop of heightened tariff rates and retaliatory measures from trading partners, particularly China, which has suspended exports of critical minerals essential to various industries.

As of mid-April 2025, the U.S. has implemented sweeping new tariffs under President Donald Trump’s administration, significantly altering global trade dynamics. The baseline tariff of 10% now applies to most imports, with steeper rates for countries like China, which faces tariffs as high as 145% as of April 9, 2025 [2]. Additionally, the elimination of the "de minimis" exemption has further exacerbated the situation, impacting low-cost Chinese e-commerce platforms like Temu and Shein. These trade policies have injected fresh uncertainty into global markets and led to a rise in costs for consumers.

The medical device sector, in particular, has emerged as a strong and growing investment opportunity despite the ongoing tariff uncertainties [2]. Over recent years, this industry has experienced significant growth, driven by technological advancements, demographic trends, and an increasing demand for innovative healthcare solutions. The sector includes a wide range of devices, from diagnostic tools and surgical instruments to wearable health technology and implantable devices, all of which are critical to improving patient outcomes and enhancing healthcare delivery.

Investors are increasingly turning to undervalued stocks within the medical device sector, such as Cencora, Inc. (COR), Hims & Hers Health (HIMS), and Prestige Consumer (PBH), which combine strong balance sheets with resilient operational performance [2]. These companies are well-positioned to navigate the challenges posed by tariffs and other economic uncertainties, offering multiple opportunities backed by long-term growth drivers and technological innovation.

The Federal Reserve report underscores the need for businesses to manage their cost structures effectively in the face of rising tariffs. As history has shown, the costs of tariffs typically trickle down through the supply chain, raising prices and compressing margins across industries [2]. This trend is particularly evident in the medical device sector, where increased costs could ripple through supply chains, impact affordability, and ultimately affect margins for drugmakers.

As the trade war deepens and the implementation of tariffs remains uncertain, investors and financial professionals must stay vigilant. The medical device sector, with its strong fundamentals and growth prospects, offers a compelling investment opportunity amidst the ongoing economic volatility. Businesses must also continue to adapt their strategies to mitigate the impact of tariffs, ensuring that they remain competitive and resilient in the face of these challenges.

References:
[1] https://www.thestreet.com/crypto/policy/apple-ceo-had-a-surprising-way-to-deal-with-trumps-tariff-policy
[2] https://www.nasdaq.com/articles/3-undervalued-medical-device-stocks-buy-2025-amid-tariff-woes

Ask Aime: What impact will new tariffs have on the medical device industry?