Recent news stories on the possibility of tariffs on Chinese products imported to the United States have focused on industries tangential to medical devices. However, on April 6th the New York Times published a thought-provoking piece on the impact of these kinds of tariffs on medical device pricing.
The article suggests that tariffs will likely raise the price of devices in the U.S., although few details or specifics are given.
At A.S. Freeman Advisors, our take is more nuanced. Because of its competitive nature, the North American market would be able to absorb much of the fabrication side of the tariff impact, ultimately leaving prices only modestly higher, if at all. More work would flow to non-Chinese facilities, including those in the United States. This will mean that demand for the work of supply chain companies is likely to increase sharply.
Of greater concern to domestic manufacturers should be the effect of tariffs on the cost of raw materials sourced from China. It may prove difficult to switch to domestic steel and aluminum, forcing U.S. manufacturers to deal with higher materials prices.
Please contact Tony Freeman at tfreeman@asfreeman.com with comments and questions.
