Providers Reckoning with Increased Supply Chain Costs from Trump Tariffs

Reports forecast costs swelling, forcing hospitals to be proactive with their supply chain strategy.

Tariffs imposed by the Trump administration are expected to place additional financial pressure on hospitals and health systems, affecting supply chain expenses and procurement.

Providers that haven't planned for possible tariffs will have to act swiftly to mitigate rising costs, which have the potential to further restrict hospital margins.

On February 1, President Donald Trump signed executive orders implementing tariffs on imports coming from Canada, Mexico, and China. While the U.S. reached deals with both Canada and Mexico to delay the tariffs that were set at 25% for 30 days, a 10% tariff is currently in place on all imports from China.

In response, American Hospital Association president Rick Pollack penned a letter to the president asking that medical products and drugs be exempt from the tariffs.

"Despite ongoing efforts to build the domestic supply chain, the U.S. health care system relies significantly on international sources for many drugs and devices needed to both care for patients and protect our health care workers," Pollack wrote. "Tariffs, as well as any reaction of the countries on whom such tariffs are imposed, could reduce the availability of these life-saving medications and supplies in the U.S."

Multiple reports and surveys conducted ahead of the tariff implementations anticipated supply chain cost increases.

Vizient's analysis revealed that supply chain prices are expected to rise by 2.3% between July 1, 2025, to June 30, 2026. One import from China that will be significantly affected by the tariffs, the report noted, is enteral syringes. However, the effective date on tariffs on enteral syringes was pushed back to 2026, allowing providers additional time to diversify their manufacturers outside of China.

"These dynamics are part of the reason strategic forecasting should be a routine part of provider operations and not just an annual exercise-based budgeting cycle," Jeff King, research and intelligence director at Vizient, said in a statement.

A survey by Black Book Research, meanwhile, highlighted concerns among healthcare professionals, including hospital finance and supply chain executives, payers, patients, health market customers, pharmaceutical and medical equipment manufacturers, and physicians and ancillary practice administrators.

Of the 200 respondents, 164 predicted that costs for hospitals and health systems will jump by at least 15% in the next six months as a result of tariffs. Nearly seven out of 10 (69%) respondents estimated that pharmaceutical costs will increase by at least 10% due to the China tariff on active pharmaceutical ingredients. To offset higher costs, 27% of respondents reported that they are seeking domestic or alternative international suppliers.

The situation with tariffs imposed by the Trump administration remains fluid, but it's not as if it has caught the industry by surprise. In Premier's 2024 Supply Chain Resiliency survey, 80% of providers and 84% of suppliers anticipated supply chain challenges to worsen or remain the same this year, while 85% of suppliers expected regulatory policy changes to affect supply chain strategies.

In its recent earnings call, HCA Healthcare told investors it "has been working on tariff mitigation strategies for many years," including fixed price contracting, supply chain mapping, and risk assessment, CFO Mike Marks said.

In addition to locking in prices for 70% of supply spend for 2025, HCA has also been diversifying away from Chinese suppliers, according to Marks.