The impact of tariffs on medical devices

The State Council Tariff Commission issued an announcement today that on April 8, 2025, the US government announced that the rate of “reciprocal tariffs” on Chinese goods exported to the United States would be increased from 34% to 84%. The US’s practice of escalating tariffs on China is a mistake on top of a mistake, seriously infringing on China’s legitimate rights and interests, and seriously damaging the rules-based multilateral trading system.
In accordance with the Tariff Law of the People’s Republic of China, the Customs Law of the People’s Republic of China, the Foreign Trade Law of the People’s Republic of China and other laws and regulations and basic principles of international law, with the approval of the State Council, from 12:01 on April 10, 2025, the tariff increase measures on imported goods originating from the United States will be adjusted. The relevant matters are as follows:

1. Adjust the tariff rate stipulated in the “Announcement of the State Council Tariff Commission on Imposing Additional Tariffs on Imports Originating from the United States” (Tax Commission Announcement No. 4 of 2025) from 34% to 84%.
2. Medical devices and diagnostic products is part of the countermeasures against the background of Sino-US trade frictions. Healthcare Trends will analyze the impact and possible motivations of this policy from multiple perspectives as follows:
3. Policy background and motivations   – Trade war countermeasures: This tariff increase may be a response to the US’s previous tariff increase on Chinese goods (including medical-related products), reflecting the principle of “reciprocal retaliation”. For example, after the US imposed tariffs on China under the “Section 301”, China included the medical field in the counter-measures list.
4. Industry protection: China is promoting the localization of high-end medical equipment (such as “Made in China 2025”). High tariffs can weaken the price competitiveness of imported products and gain market space for local companies (such as Mindray and United Imaging).
5. Technological competition: Biopharmaceuticals and high-end medical devices are strategic industries. Tax increases may be intended to limit the control of the US technological advantage over the Chinese market, while forcing domestic R&D investment.
6. Impact on China Short-term challenges: Tertiary hospitals that rely on imports may face increased equipment procurement and maintenance costs, especially high-end imaging equipment (such as MRI, CT) and tumor-targeted drugs. Some areas where domestic substitution is not yet mature (such as gene sequencers and high-end reagents) may have supply gaps.
   Long-term opportunities: Accelerate domestic substitution**: Policies and capital will be more intensively invested in local innovation, such as domestic PET-CT has gradually replaced imports. Forcing technological breakthroughs, companies may bypass tariff barriers and improve their technological capabilities through mergers and acquisitions or international cooperation (such as joint ventures with European companies).
7. Impact on the United States American companies account for about 40% of the Chinese medical device market (such as Johnson & Johnson and GE Healthcare). After the tax increase, they may be replaced by European (Siemens, Philips) or local products. Some US companies may consider setting up factories in Southeast Asia (such as Singapore and Malaysia) to avoid tariffs, but it is difficult to completely transfer the production of high value-added products in the short term.
8. Industry response strategy Local companies need to speed up the research and development of core components (such as CT detectors and ultrasound probes) to avoid relying on imports for key links. Multinational companies may adopt the “in China, for China” strategy to increase local production (such as Medtronic building a research and development center in Shanghai). Tertiary hospitals may adjust the proportion of equipment procurement, and hospitals below the second level are more inclined to domestic production, but high-end demand still exists.
9. Potential risks and controversies If special categories such as anticancer drugs are not exempted from tariffs, medical costs may increase, and precise policy exemptions are required (such as the previous anticancer drug tax reduction case). Sino-US R&D cooperation in the field of biomedicine (such as clinical trials) may cool down due to political factors, affecting the speed of innovation.
10. Future Outlook If the Sino-US trade negotiations are restarted, medical products may be removed from the tax increase list as a bargaining chip because of their high sensitivity to people’s livelihood. Even if the tariffs are cancelled, China’s trend of promoting independent and controllable medical industry chain will not be reversed, and the United States may turn to stricter technology export controls.
    In short, the tariff measures will intensify competition between the Chinese and US medical industries in the short term, but in the long run, the scale advantage and policy support of the Chinese market may give rise to more competitive local companies. However, how to balance protectionism and global cooperation and avoid excessive transfer of medical costs to patients remains a challenge that policymakers need to carefully weigh.