Section 232 tariffs are the wrong tool for supply chain resilience, says HIDA.
By Kathryn DiBitetto, Vice President of Government Affairs
After nearly a year of activity and uncertainty around tariffs, the medical supply chain now faces its biggest and most sustained challenge. That’s why the Health Industry Distributors Association (HIDA) strongly opposed new tariffs in its response to the Administration’s Section 232 investigation into medical products. While we support the Administration’s goal of strengthening U.S. manufacturing and supply chain resilience, we explained why new tariffs and reshoring mandates are the wrong tool for the job. Here’s a summary of our comments. Any additional tariffs would:
1. Stall the momentum of a rapidly diversifying medical supply chain.
2. Not address the underlying realities of manufacturing in the United States.
3. Fail to make U.S. manufacturing a self-sufficient producer of medical products.
Tariffs fail to address existing barriers impacting U.S. manufacturing
- Dependence on foreign-sourced inputs: 98% of U.S. medical manufacturers still rely on imported raw materials or components, meaning tariffs on steel, aluminum, and timber simply increase costs rather than encourage full domestic integration.
- Unchanged economic fundamentals: Production costs in the U.S. remain 300% to 400% higher than overseas, dominated by cost of production (85%) and labor availability (85%). Tariffs do not fix these core economics.
- Infrastructure limitations: U.S. sterilization capacity is already maxed out with only 90 commercial sterilizers – limiting the ability to produce and finish medical-grade products domestically.
Tariffs create new economic barriers
- Increased input costs: Section 232 tariffs on raw materials (steel, aluminum up to 200%) make U.S.-based production more expensive, reducing competitiveness of domestic factories just as they are expanding.
- Discourages further investment: With 54% of manufacturers planning to expand U.S. operations, new tariffs risk reversing the “America First” effect by driving production costs back up and deterring future reshoring.
- Burden on healthcare providers: Providers and distributors cannot absorb new tariff-driven supply cost increases – financial strain could ripple through the system, leading to fewer suppliers and higher prices.
New tariffs and aggressive reshoring policies risk endangering the progress already made in diversifying the medical supply chain.
Negative consequences of new tariff barriers
- Providers under pressure: Rising product costs from tariffs would increase hospital financial stress – particularly in rural areas – and strain federal budgets since the government funds 40% of healthcare spending.
- Competitive disadvantage: New U.S. manufacturers face an uphill climb against entrenched global competitors; adding cost burdens could collapse fragile new ventures before they mature.
The Administration must pursue policies that strengthen the medical supply chain, not strain it. Domestic manufacturing growth depends on addressing core challenges such as labor shortages, high production costs, and limited infrastructure, rather than imposing new tariffs that compound these pressures. The healthcare sector has made significant progress in diversifying global sourcing and expanding U.S. manufacturing capacity. Maintaining this momentum requires stability, predictability, and targeted incentives.