A new report is urging Washington to pursue what it describes as a “smart, surgical” tariff strategy on medical devices and healthcare supplies. The report argues that broad trade restrictions could raise costs for hospitals and patients, and lead to delays in diagnosing cancer and other deadly diseases.
The report, produced by AOM Advisors and Action for Health, says sweeping tariffs on critical healthcare products could disrupt the system. It says medical-device tariffs should be “sequenced” and “targeted” on China while protecting North American supply chains.
The Trump Administration wants to reduce dependence on Chinese manufacturing of pharmaceuticals, medical devices, semiconductors, and minerals. According to the report, about 70% of medical-devices needed in the U.S. are manufactured domestically. U.S. device manufacturers produce around 40% of the global market supply and support 2.8 million American jobs.
The report calls for Section 232 tariffs on Chinese personal protective equipment products such as gloves, masks, and gowns, arguing those supply chains can be relocated to domestic or North American production capacity relatively quickly. But the report draws a distinction between these and more technologically complex medical products, such as syringes, catheters, diagnostics equipment, implantable devices, and other hospital essentials.
The report says broad tariffs create particular risk in healthcare, where providers often operate on narrow margins and cannot easily absorb higher supply costs. It cites Federal Reserve research concluding that approximately 90% of tariff-related costs from recent trade actions were ultimately absorbed by American businesses and consumers rather than foreign exporters.
“Hospitals are uniquely exposed to supply-chain inflation because Medicare reimbursement already frequently falls below the actual cost of care,” the paper states.
The paper also emphasizes the downstream implications for early disease detection systems, including for cancer screening and preventative medicine.
Healthcare specialists have warned that disruptions in diagnostic supply chains can delay testing to detect diseases such as colorectal cancer at earlier, more treatable stages. Colorectal cancer is one of the leading causes of cancer-related deaths in the United States, and early detection dramatically improves survival outcomes.
The report argues that a phased tariff structure should be used where new duties take effect after domestic manufacturing capacity expands. It says targeted tariffs should be matched with federal incentives to accelerate domestic production, and that Mexico and Canada should be treated as trusted partners in a North American manufacturing base.
According to the authors, imposing tariffs on imported products that comply with U.S. treaties could undermine re-shoring efforts already underway as manufacturers are relocating portions of their production from China to North America. This includes the Tijuana–San Diego manufacturing corridor, which is the single largest medical-device production hub in North America and a model for cross-border production.
“The goal should not simply be higher tariffs, but stronger resilience,” the report states.
For diseases such as colorectal cancer — where early testing and rapid diagnosis can determine survival rates — the report says uninterrupted access to affordable diagnostic tools is critical.