The healthcare industry has faced a flurry of sweeping changes at the federal level since President Donald Trump took office. In recent months, healthcare leaders have scrambled to come up with strategies to address proposed Medicaid cuts, slashed research funding and the dismantling of the country’s public health infrastructure.
Now, the Trump administration’s tariffs are the latest threat to further destabilize an industry already grappling with mounting financial and operational pressures. Even though Trump paused most reciprocal tariffs for 90 days last week, hospitals are still bracing for the effects of these trade regulations, as the pause won’t last forever.
It’s also worth noting that many essential healthcare products — including active pharmaceutical ingredients, medical devices and personal protective equipment — are manufactured primarily in China. The Trump administration has instated a 145% tariff on all goods imported from China — and that rate is not a part of the pause.
Since these goods are all must-haves, hospitals are left with little choice but to deal with the increased costs — which experts warn could significantly exacerbate the instability of hospitals’ bottom lines.
Tariffs are part of a broader strategy to bolster domestic manufacturing, but healthcare leaders say it would take decades before the U.S. could onshore the majority of its medical supply production. In the meantime, experts believe tariffs could worsen hospitals’ already shaky finances, as well as compromise their ability to deliver timely, high-quality care.
How will tariffs impact hospitals?
The healthcare supply chain has always been fragile and complex, noted Akin Demehin, the American Hospital Association’s vice president quality and safety policy.
Domestic disruptions often occur after natural disasters like hurricanes — such as the IV fluid shortage caused last year by Hurricane Helene. International events also often result in shipping issues and shortages of raw materials, Demehin explained.
Hospitals have had to routinely adapt to supply chain disruptions by doing things like redesigning sourcing strategies and pulling data to manage inventory for decades now — but the Trump administration’s tariffs take supply chain challenges to a new level, he pointed out.
This is because U.S. healthcare delivery is highly dependent on foreign goods. For instance, the majority of drugs prescribed to Americans are produced overseas, primarily in China and India. The U.S. also imports many of its medical devices — in 2020 alone, the country’s medical device imports totaled nearly $70 billion.
Even for more basic supplies, providers in the U.S. rely heavily on foreign manufacturing. Take surgical gloves and syringes for example — the vast majority of these products are manufactured outside North America.
Tariffs will increase the costs of these goods, but hospitals have no choice but to buy these essential items. These added costs could cause major financial strain on hospitals, as many of them operate on razor-thin margins they are already struggling to maintain amid pressure from labor costs and reimbursement challenges.
Demehin is also concerned that increased supply costs, combined with limited domestic production capacity, could lead to shortages. He is mainly worried about how these shortages will affect the quality of care hospitals are able to deliver to their patients.
“The expertise of clinical teams comes together with a wide range of medical devices, drugs and other supplies — and all that has to come together at the right time to deliver the best care possible,” Demehin explained.
Healthcare has a lot of sequenced treatment pathways that require a constant supply and are especially vulnerable to tariff-related delays or cost increases, he added.
“We know chemotherapy treatments rely on a careful schedule of the delivery of those drugs. We know that the availability of antibiotics is incredibly important for a wide range of patient care issues. There’s certain cardiovascular medications that often are sourced internationally. We also know that a lot of devices that we use day in and day out to deliver care come from international sources,” Demehin remarked.
Without a consistent supply of these types of goods, providers can’t deliver the best care, he noted.
Not only is care quality at risk — but workforce protection is, too. Demehin pointed out that much of the personal protective equipment used to protect healthcare workers, such as masks, gloves and respirators comes from overseas. With tariffs, these products become at risk of being rationed or reused.
How are hospitals reacting?
Tyler Giesting, director of healthcare M&A at consulting firm West Monroe, said that providers are actively reviewing their supply chains and preparing contingency plans to assess and mitigate the potential impact of new tariffs.
This could include conducting inventory audits to identify which supplies are sourced from overseas, modeling cost surges under various tariff scenarios, and exploring alternative vendors or domestic manufacturers, he noted.
Giesting also pointed out that hospitals are in discussions with their group purchasing organizations (GPOs) to understand the effects tariffs could have on existing contracts and supply availability.
Leveraging volume to drive down costs, GPOs negotiate bulk purchasing contracts for medical supplies and equipment on behalf of hospitals. Giesting is concerned about the enforceability of these contracts under new tariffs.
Tariffs can blow up GPOs’ contracts by dramatically increasing the cost of imported goods — and therefore triggering force majeure clauses and rendering fixed-price agreements financially unsustainable, he explained.
This could lead to changes in GPO contract structures, possibly resulting in shorter or more flexible agreements, Giesting stated. When these contracts are broken or renegotiated, hospitals are typically left paying more.
Overall, hospitals are on high alert over tariffs, he said. He pointed out that there is still a lot of uncertainty surrounding the issue, making it a chaotic time for hospitals’ leadership teams.
“If your role within your organization involves purchasing or supply chain, or frankly, finance, it’s probably all hands on deck for the near term,” he declared.
Another healthcare expert — Ron Present, partner at consulting firm Armanino — also highlighted the uncertainty hospitals must deal with when it comes to tariffs.
Providers are in regulatory limbo due to ongoing legal challenges to executive orders, which makes strategic planning difficult, Present noted.
Several lawsuits have been filed arguing that the tariffs exceed the president’s authority and lack proper justification. For instance, a group of small businesses recently sued the administration, claiming that the tariffs were enacted without public input and threaten significant economic damage. Additionally, the Trade Review Act of 2025, a proposed bipartisan bill, seeks to reassert Congressional authority over trade policy decisions.
Present stressed the importance of preparing for different scenarios.
“I think that what all the providers need to be doing is focusing major attention on strategy and having different scenario projections of what they’re going to do based upon what supplies become scarce. When it becomes financially not feasible for them to provide services, how do they consolidate? Which services will they cut?” Present remarked.
Some providers could pass on added costs to the patient. Black Book Research released a report last week based on survey responses from 81 hospital executives and 28 physicians and ancillary practice administrators — and it found 75% CFOs plan to shift costs to patients and payers to cope with the added financial pressure.
But many nonprofit providers can’t just raise prices to cover costs — especially those that serve a lot of patients on Medicare and Medicaid, Present pointed out. Some hospitals will have to cut services or staff instead, he said.
Black Book’s survey found that 29% of hospital executives are considering staff reductions and wage freezes as a response to tariffs — and 94% are pausing tech modernization projects.
How will hospitals weather this storm?
In the eyes of Dee Donatelli, tariffs are just one piece of a broader and ongoing challenge in the healthcare supply chain.
Donatelli is senior director of spend management at healthcare software company Symplr. She has extensive experience in healthcare supply chain management, having held executive supply chain roles at several healthcare organizations in the past, including Vizient and Kansas-based Via Christi Health.
She thinks the real problem is how hospitals and other providers manage the total cost of care, not just the unit price of products like ventilators or gloves. In her view, the U.S. healthcare system tends to focus too much on shaving prices, but it fails to optimize how products are used and integrated into care delivery.
Donatelli also pointed out that few hospitals are well-equipped to track or manage the total cost of care.
“There are very few, if any, hospitals that do that well because there’s so many disparate data points that have to be brought together to be analyzed, and we don’t have technology to do that for us,” she declared.
Donatelli expects hospitals to respond to tariffs similarly to how they reacted to the Covid-19 emergency: by being more resourceful. Items like masks, gloves and face shields — which were normally single-use — had to be reused carefully to conserve limited stock, she said.
Hospitals may need to rethink their product usage, look for alternative supplies, and try to stretch their limited resources creatively and safely, she stated.
“If you’re not looking at the total cost of care, and you’re not looking at how you are using products, then you’re missing part of the equation. You can only buy so much if you only have a limited amount of money. So we’re going to have to get creative again, just like we did during Covid,” she remarked.
Donatelli said providers simply have no choice but to accept this reality — because while onshoring medical manufacturing in the U.S. is a noble idea, it would take decades to achieve. She and many others believe Trump’s overall goal of bringing back manufacturing to the U.S. is unrealistic.
FDA bottlenecks have historically slowed down the country’s domestic healthcare manufacturing, as the agency imposes rigid regulations on facilities producing healthcare products, Donatelli noted.
The sheer volume of U.S. healthcare demand, as well as consolidation in the supplier market, are key challenges as well.
“There’s been such significant mergers and acquisitions within drug and medical product manufacturers — there are so few of them. They would be hard pressed right now to pick up the volume necessary to provide all of the goods and services required in the United States’ 3,000 hospitals,” Donatelli said.
When it comes to tariffs, she believes one thing is certain — that they have exposed a deep vulnerability in the U.S. healthcare system’s reliance on global supply chains. As hospitals brace for higher expenses and potential shortages, they are being forced to confront longstanding gaps in cost management and sourcing strategy.
Donatelli thinks the path forward will likely require a mix of creativity, collaboration and difficult decision-making, all while trying to keep patient care at the front and center.
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