Are Medical Device CEOs Worried About Trump’s Proposed Tariffs?Are Medical Device CEOs Worried About Trump’s Proposed Tariffs?

President-elect Donald Trump has promised sweeping tariffs on goods manufactured in China – a measure not lost on medtech CEOs.

And while medical device companies might not be taking shoemaker Steve Madden’s approach and reducing half of production in China, among medtech CEOs there is concern.

The reason behind tariffs is that they theoretically incentivize manufacturing by making imported goods comparatively more expensive than items made in the US. 

We combed transcripts of earnings calls that occurred after the Tuesday election to get an understanding of how medtech would deal with the potential tariffs.

In a recent earnings call, Bernrd Montag, CEO of Siemens Healthineers, answered questions about the potential impact of the election results and about tariffs.

“When it comes to the US market, we don’t expect a major impact on demand or different healthcare policies,” Montag said, according to a Seeking Alpha transcript of the call. “I think this is also an important angle, and it would have been — would have made our customers nervous already in the last year in case they would have expected a change depending on who wins the election. Sorry, but your question was more around tariffs.

“Let me dissect it into two answers. On one hand, there is the topic of, let's say, a US vs. China situation. Here, we are very, very well positioned because basically, we have twin factory setup, we can deliver — we deliver from China to China, and we deliver to the US from the US and from Europe.”

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He also noted, “… What is the impact of even more tariffs when it comes to potential Europe and United States situations? And here, let me remind you that despite Jochen and I may be speaking with a German accent, Siemens Healthineers is a company which has more employees in the US than in Germany. Two out of the four segments are headquartered in the United States, yes, Varian and Diagnostics. And even in the Imaging segment, ultrasound, and molecular imaging are headquartered in the US. So we are, from a trade flow point of view, much more balanced than sometimes people assume.”

The impact of the tariffs could be small for Solventum, said its CEO Bryan Hanson. Solventum is the healthcare spinoff of 3M.

“If I just think 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, according to a Seeking Alpha transcript. “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. According to the Seeking Alpha transcript of the earnings call, Hanson added, “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.”

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Baxter executives have a different perspective when it comes to tariffs, as it is in the process of a transformation. Part of the reason behind the metamorphosis is because the Franklin Lakes, NJ-based company sold Vantive, its kidney care business to the Carlyle Group in August for about $3.8 billion.

“China post-Vantive for Baxter is going to be with some of the exits that we’re having right now, less than 2% of our sales,” said Joe Almeida, Baxter’s CEO, according to a Seeking Alpha transcript of the call. “So, the impact for us is quite small despite the fact we had some impact this quarter for HST in the VBP. But it’s remarkably different, the new Baxter versus the old Baxter.”

According to the Seeking Alpha transcript, he added, “So, the tariffs that we’re talking about here would be very much related to raw materials, will be chips that we still buy there and other things that will impact the industry in general. But we do not make specific products in China for the US as Baxter. Even today with Vantive, with the renal business, we don’t have that. Post Vantive, we will not have that.”

Related:Is Medtech Downplaying the Impact of Trump Tariffs?

While nothing is set in stone, Trump has been bullish about tariffs. During an interview with Bloomberg’s editor-in-chief, the President-Elect spoke about his love for tariffs and how the measure could benefit the economy.

You can find his comments about tariffs at the 1:43 mark.