Building resilient supply chains amid tariff uncertainty

By Stuart Morris-Hipkins, MSc, ACMA, CGMA
Chief Solutions Officer, ECRI

Keeping up with tariffs’ effects on healthcare can feel futile right now, as policies and market reactions change frequently. President Trump’s tariffs have imposed a minimum 10% duty on imports to the United States, with higher rates targeting China, the European Union, and Japan. The repercussions have been marked by international retaliatory tariffs and new macroeconomic headwinds.

Healthcare leaders are paying close attention to potential ripple effects in the global supply chain – especially from China, a major supplier of healthcare supplies and medical devices. Tariffs can drive up healthcare costs, with the increase typically passed from manufacturers to distributors and, ultimately, to hospitals and patients. Healthcare providers who serve large populations of patients on Medicare and Medicaid are especially vulnerable to having to absorb those added expenses and cut costs elsewhere.

More than 80% of industry stakeholders say health system costs will increase at least 15% in the next six months, and 90% of healthcare supply chain professionals foresee major disruptions. Accordingly, manufacturing performance dipped in March, a warning about what may come.

Impacts Call for Real-Time Data

Supply chain leaders know disruptions well—from natural disasters to the pandemic. But these tariffs bring  unique impacts with potential and unpredictable  supply chain and transportation disruptions making real-time data essential for agile planning.

Voices from the Field

ECRI serves more than 4,000 health systems’ supply chain teams around the world. Over the last few weeks, we have analyzed our supply chain datasets and connected with clients to help them navigate unique challenges they’re facing.

Medical supplies – specifically Personal Protective Equipment (PPE) products like gowns, gloves, and masks – are their biggest concern as it relates to cost increases from tariffs.

We are starting to see tariffs and their associated costs reflected in the spend data we receive from clients, but thus far have been limited to furniture and construction materials. 

Navigating Tariff Uncertainty

While the longevity and effects of tariffs remain to be seen, there are steps healthcare leaders can take to help their organizations weather the storm, including:

• Analyze contracts to determine risk. Many contracts include protections from price increases during the agreement period. Review existing contracts to determine what changes are allowed, under what circumstances, and on what timeline.
• Create a robust, but realistic, monitoring plan. Organizations should assess what products they rely on, where they are manufactured, and the tariffs that may hinder acquisition. This analysis must be manageable enough to keep pace with rapidly changing policies, requiring strategic choices about which data to track. Organizations should also track functional equivalent alternatives and corresponding key performance indicators so supply chain and in turn clinicians, can confidently navigate to alternative products, when necessary.
• Diversify operations, where possible. Providers should take this as an opportunity, where possible and appropriate, to consider diversifying or modifying suppliers within service lines and categories. One of the primary goals of the tariffs is to boost domestic manufacturing of products including medical/surgical supplies and equipment. As a result, new players may emerge both domestically and internationally.
• Consider maintenance costs. Tariffs could impact not just one-time purchases but also ongoing maintenance and supply costs. Therefore, it is critical to review your service and support contracts with existing and potential suppliers to ensure there are appropriate protections and guarantees in place. 

Pitfalls to Avoid

The worst thing you can do in this uncertain market is to ignore it. Supply chain leaders need an unfiltered line of sight on medical supplies and devices to effectively navigate current and future disruptions. It’s essential to prepare and continuously refresh your plans.

Without adequate planning,  supply chain leaders are at risk of acquiring products from unreliable sources in a in a bid to ensure adequate supply. ECRI named substandard devices and supplies the #4 patient safety concern for 2025 in recognition of the risk this poses to patient care.

The Bigger Picture: Building Supply Chain Resiliency

Supply chain resiliency was a problem before tariffs were announced, and it must continue to be a priority regardless of how tariffs unfold. Shortages of personal protective equipment (PPE) during COVID-19 and IV fluids following Hurricane Helene are just two recent examples of how fragile the medical supply chain is and how disastrous disruptions can be.

The United States has invested in domestic manufacturing in recent years, but issues persist. U.S. factories established to provide PPE post-pandemic sit unused or shut down as they struggle to compete with overseas alternatives.

Tariffs are intended to help address this problem but may not solve it entirely. Increasing American manufacturing requires a solid customer base, recurring orders, and predictable markets. Policymakers can support these conditions by assuming a consistent posture to trade policy, providing subsidies for organizations that buy American, and facilitating fixed-volume contracts with domestic manufacturers to maintain the national strategic stockpile.

Moreover, creating a resilient U.S. supply chain is not a black-and-white issue of foreign versus domestic goods. Healthcare and economics are global issues. Policymakers must be thoughtful about allowing the nation to tap into all the global economy has to offer, while maintaining a steady baseline of domestic manufacturing that systems can rely on.

This is a delicate balance, and ECRI is here to help. ECRI operates the industry’s most comprehensive supply chain decision support and benchmarking datasets, and our staff of experts and data analysts are a resource for healthcare and government leaders seeking to understand the effects of trade policy on medicine.

Much remains to be seen on how these latest tariffs unfold, but you don’t have to navigate the uncertainty alone.