The US government’s sharp tariff hike on China to 125 per cent, alongside 10 per cent baseline tariffs for most partners, is sending shockwaves through the medtech sector. While rising costs and supply chain risks threaten innovation, tariffs may spur investment in US-made devices. With the right incentives, reshoring production could attract venture capital investor interest, though risks vary by therapy area and device type, according to GlobalData.
President Trump announced “reciprocal tariffs” on many countries on April 02, with a minimum 10 per cent tariff across the board. However, many countries were hit with tariffs much higher than 10 per cent, including 49 per cent for Cambodia, 46 per cent for Vietnam, and 20 per cent for the European Union. One week later, Trump announced a 90-day pause on some tariffs, but raised China’s tariffs to 125 per cent.
Alexandra Murdoch, Senior Medical Analyst, GlobalData, comments, “Such tariffs could drive up costs for both imported components and entire devices, disrupting global supply chains and raising production expenses for US-based medtech firms. This poses significant challenges for startups and may deter investment in domestic manufacturing, especially if countries respond with retaliatory trade measures.”
Retaliatory tariffs from other countries such as China or the EU can also harm US exports of medical devices. This can limit revenue potential, which in turn reduces capital inflows and makes US medtech companies less attractive to investors.
A downturn in medtech investments will be significant for the US. According to GlobalData’s deals database, in 2024, the US recorded the highest investment value and volume in the medtech sector, indicating its dominance in the market. In 2023, the US attracted approximately $290 billion in capital investment.
Murdoch continues, “The uncertainty around trade policy and the constant threat of new tariffs creates an unstable environment for investors, and as such they may delay funding until there is more clarity.”
Despite the potential negative implications of the US tariffs, there may be a silver lining as well. If tariffs target foreign-made devices, they may protect or boost US-made medtech firms that manufacture devices domestically. This could incentivise investment in US production facilities and attract VC interest in companies offering US-based alternatives.
Additionally, government incentives may follow tariffs. Sometimes tariffs are a part of a broader industrial policy that includes tax credits, grants, or R&D funding. At this point, it is unclear whether the US government will implement such incentives, but if they did, investors could see opportunity in early-stage US medtech manufacturing and companies aligned with reshoring efforts.
At the same time, the investment risk will vary from one therapy area to another. Within surgical devices, tariffs on metal components or advanced sensors could raise costs, and retaliation might limit exports of high-margin US surgical robotics. If there is a push to reshore production, some investors might bet on domestic contract manufacturers or US-based startups focused on next-gen robotics.
On the other hand, many wearables and remote patient monitoring devices are manufactured in Asia – China, Taiwan, and Malaysia specifically. Tariffs on electronics or batteries will result in higher costs or supply chain shifts. Larger firms might eat the cost, but for startups or smaller OEMs, tariffs are a serious scale risk. Tariffs in this therapy area could increase investor preference for software-first medtech or US based assembly.
Murdoch concludes: “The full implications of the US government’s tariffs are still unknown for the medtech sector. The uncertainty and potential for increased costs will likely result in short-term caution and delays in funding from investors. In the long-term, if paired with pro-manufacturing policies, tariffs might relocalise medtech production, potentially sparking new investment in US supply chains and startups.”