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Donald Trump has a longstanding fixation with tariffs. Once calling them the “greatest thing ever”, the US President believes tariffs are a mechanism to regulate trade and retaliate against foreign nations.

As 2025 unfolds, the Trump Administration has homed in on Section 232 investigations – a US government review to determine if imports threaten national security.

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Citing national security as the reason behind the probes, the US Department of Commerce’s is centred on personal protective equipment (PPE), medical consumables, and medical equipment, including medical devices. The investigation has sparked fresh concern across the medical device industry, while motivating players in the space to utilise customs planning protocols to mitigate their probable impact – tariffs.

Meanwhile, Trump’s view is that tariffs are making the US . While they may benefit the current administration, with US Treasury Secretary Scott Bessent , experts agree that tariffs have a deleterious economic impact on companies reliant on importation. It is important to note that tariff costs are borne by importers, not foreign governments, contrary to Trump’s belief.

The Advanced Medical Technology Association (AdvaMed) has to consider how lower tariffs combined with supportive policies will promote increased medtech manufacturing and job growth in the US. With similar concerns, has highlighted that measures that may result from the 232 investigation could adversely impact patient access to fundamental medical technologies.

2025: the year of the tariff

Trump imposed tariffs under the International Emergency Economic Powers Act (IEEPA) in February 2025, with sweeping tariff measures taking effect from 2 April. Most critical for the medical device industry, tariffs on China imports are currently set at 55%. However, posting to his Truth Social platform on 10 October, on China imports by 1 November.

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IEEPA is most commonly used to impose economic sanctions on foreign entities for violations such as human rights abuses. While tariffs remain in place, two US federal courts have ruled against the statute’s use to impose them, with the Supreme Court set to hear these cases on 5 November.

The upcoming Supreme Court hearing is likely what the Trump administration is preparing for, according to Damon Pike, principal & technical practice leader at consultancy BDO.

“If the IEEPA tariffs are struck down in the Supreme Court, they’ve got to have another source of revenue to replace it with,” says Pike.

Shifting away from China: no mean feat

The key challenge tariffs bring for the medical device industry are that the industry is heavily reliant on China’s manufacturing capabilities.

For manufacturing in the medical device space, David Navazio, CEO of US wound care company Gentell notes that there is a “whole regulatory approach”, meaning that disentanglement from using China as a manufacturing hub is not an easy thing to accomplish.

Navazio says: “Any such undertaking is going to take at least five years, and the current administration is not going to last five years.

“I think companies are saying, you know what, we’re going to bring this manufacturing here, and just assume that another administration will have a better understanding of how tariffs will affect the US economy.”

Gentell’s executive vice president, Kevin Quilty, also highlights that shifting manufacturing to the US is not a straightforward process in terms of regulation.

“For example, we make a dressing. It has a 510(k) approval in the US, and if we decide to change the raw material in that dressing, we have to then reapply,” says Quilty.

“We can’t just change the raw materials from one supplier to another. It can take an extensive amount of time and effort, and then you have to take your product off the market while you’re changing it.”

Tariff planning strategies taking root

Trump’s aggressive stance on tariffs is causing concern among C-suite executives, and strategies to deal with the challenges are beginning to unfold.

“Even CEOs and company presidents are taking charge and saying, we need to have a strategy; we can’t just rely on whatever the administration is doing,” says Pike.

The current situation features challenges related to tariff classification sourcing, supply chain, and country of origin issues all rolled into one.

“The other issue is transfer pricing, and especially so in the medical device industry, because participants are often global conglomerates that are related parties,” says Pike.

Regarding income tax, companies ideally want a high inventory basis so they can get a bigger deduction from whatever they owe in taxes, but their inventory basis essentially their customs values, meaning that with a higher customs value, they are required to pay more in duties.

“This is resulting in this constant tension between income tax and customs that has to be balanced, because this otherwise results in a whipsaw effect, where you get one benefit with customs or the IRS and vice versa, and it doesn’t help with the other agency,” Pike explains.

Another factor coming into focus due to Trump’s tariffs is the first sale rule that’s available in the US for customs planning.

In a typical scenario, Pike explains that were a contract manufacturer to make something for a big medical device conglomerate in the UK, and resell it to their US distributor, normally, the price that the US distributor pays to the UK, which is the highest value, would normally be the basis for determining the customs duty.

“But if you meet certain rules for arm’s length pricing, you can use the factory invoice price, whether it’s an unrelated contract manufacturer, that first sale can qualify, as long as the merchandise is shipped directly from the factory to the US,” Pike says.

Pike explains that to utilise this mechanism, related parties have begun creating new middlemen structures, separating out the valuative determinants such as intellectual property since it represents a huge part of the value of what’s being imported.

“Companies are creating these middlemen companies to hold all of that intellectual property, and then the manufacturing entity is just selling whatever the cost of manufacture is for the physical production of the medical device, then marking it up a small amount to sell to the middleman, and then the middleman, which has all the intellectual property, they then they sell to the US customer, typically a distributor.

“They still get all the margin on the second sale, but then it becomes exempt from customs duties if they can use the original factory invoice price.”

Where’s Congress?

Beyond manufacturing concerns related to tariffs for the medtech industry, the probes add to complications emanating from the ongoing US-China trade war, with China recently announcing additional global export controls on 12 rare earth metals, some of which are key to the production of medical devices such as MRI scanners and laser devices used for corneal surgery.

Congress used to issue a miscellaneous tariff bill that could alleviate the tariff threats being faced by the device industry, should the 232 investigations result in tariffs.

Pike explains: “Every two years, like clockwork, Congress used to pass a miscellaneous tariff bill, and they would put in a provision that would temporarily suspend the duty on products where importers could not buy them from any other place but outside the US, like rare minerals.”

“However, this process stopped when Biden took office in 2020, and there has not been a miscellaneous tariff trade bill since.”

Pike says that Congress could also move to temporarily suspend the Chapter 99 duties under the Harmonized Tariff Schedule (HTSUS) that everybody has to pay under the trade remedy tariffs. 

“Congress could easily decide to suspend the duties under these statutes because the importer has to purchase it from outside the US, like critical minerals. Congress could fix this in a heartbeat, but no such action has yet been taken. And it’s reasonable to ask, where’s Congress?”

Pike’s prevailing view is that we may be in for a “long ride on the tariff train”, yet he hopes the Trump administration will “wake up” eventually and provide tariff exemptions for the medical device industry.

“Tariffs have a huge impact. Healthcare equipment constitutes necessary goods, and Section 232 tariffs shouldn’t even apply to anything healthcare related,” concludes Navazio.

“But this is all reversible. It’s all fixable. We’ve seen it in the past when we went from Carter to Reagan; almost overnight, with Reagan being a president, the economy completely changed.”

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