American Health Care Will Suffer Under Trump’s Tariffs
Over the last few years, there has been increasing pressure on the U.S. health care system: this includes issues related to hospital staffing, as well as financial and operational challenges that have led to many health care facilities closing and reducing vital services like emergency and obstetric care.
[time-brightcove not-tgx=”true”]On a daily basis, many of the nation’s largest health systems have either announced major deficits or are cutting costs. For instance, one of the nation’s premier health systems, Mass General Brigham (MGB), recently reported a 72-million-dollar operating loss in fiscal 2024 despite an intensive focus on cost management. (The response has included layoffs of approximately 1,500 employees or roughly 2% of its workforce.) Other large healthcare systems such as Vanderbilt, Yale New Haven Health, the University of Pennsylvania Health System, Orlando Health, and many others have been affected by similar cost issues and have had to lay off people or downsize services. The most fragile level of health delivery encompasses our rural facilities. A February Chartis review reported that 432 rural hospitals are at risk of closing in 2025.
Now, health care is facing yet another obstacle: tariffs. President Trump’s announcement of an increase in tariffs on imports into the U.S. only stands to hurt our already fragile health care system. Many of the supplies that our patients and hospitals depend upon to safely operate are imported, including basic and necessary supplies such as medicines, gloves, gowns, and IV supplies. Tariffs will not only lead to higher prices for those goods but will astronomically add costs for the patients we care for.
Read more: Trump Doubles Down on Trade War, Threatening China With More Tariffs
One of the largest costs that impacts health care is medications. A significant portion of active pharmaceutical ingredients (APIs) and finished medications are manufactured abroad, with a substantial percentage of APIs originating from India and China—countries that are being hit with major increases in tariffs. Of finished medications ready for use, a substantial percentage are also manufactured overseas: India accounts for 48%, China 13%, and Europe another 7%.
Even completed medications produced domestically are made with imported APIs with estimates running over 30%, according to a 2022 study by Avalere Health. The end result is price increases that are not only passed on to Pharmacy Benefit Managers (PBMs) but also to patients and their families. Consumers are the ones who suffer in the end, with higher out-of-pocket costs leading to some skipping doses or failure to fill prescriptions altogether leading to adverse outcomes.
Many other routine supplies essential to the function of hospitals are manufactured abroad and will be affected by a rise in tariffs. Surgical gloves, for instance—one of the most commonly used products to provide patient care—illustrate our foreign dependence. U.S. medical facilities are completely reliant on foreign suppliers with less than 1% of gloves being produced domestically. In fact, Malaysia accounts for 60% of the world’s nitrile gloves production.
Intravenous catheters also represent another essential aspect of patient care and a mainstay of modern medicine that is largely manufactured outside of North America, with China and India being leaders. Surgical masks, which were so important during and after the pandemic, are emblematic of the fragile international supply chain of medical devices that our hospitals depend upon. Masks were one of the major types of durable medical equipment (DME) that were not readily available in the U.S., making it a key commodity as COVID-19 ignited in early 2020. Several U.S. companies did step in to manufacture disposable surgical masks. However, even with that major initiative, they too only could produce a fraction to meet U.S. demand.
As hospitals annually spend billions on major equipment and technology—the majority of which is manufactured outside of the U.S.—we must brace for tremendous financial stress on our health care system as a whole. Equipment such as ventilators, anesthesia machines, X-ray equipment, and state-of-the-art CT and MRI scanners are all either manufactured or contain parts from abroad. An estimated increase of 20 to 30 % in the costs of such equipment may deal a major blow to the vast majority of hospitals and clinics in the U.S. but also abroad. Deferring or delaying such expenditures in an effort to save money may adversely impact patient care. This includes the inability to timely and accurately diagnose life-altering or threatening conditions using imaging modalities which are essential in emergency medicine and trauma care.
Our leaders need to address this major issue, as it will greatly impact—or crumble—our health system. While it is vital to invest in rebuilding a robust domestic supply chain for pharmaceuticals, focusing on rebuilding the U.S. pharmaceutical industry which was a global leader many decades ago, it also takes time. Yes, we need to reform and refurbish such facilities to enable the U.S. to effectively and efficiently manufacture medicines, reducing our costs and foreign dependence on a global supply chain. But we also must acknowledge that sharing health care resources with other countries still offers the opportunity to source products, APIs, and other DME that are scarce in the U.S., fostering cooperation and collaboration to save lives.
Above all, our elected leaders need to face the issue of tariffs on medical supplies and act to lower such increases because our health systems collectively cannot afford it. Our health system is not equipped to absorb the enormity and burden of such increased costs.