Trade War Jitters Hammer Medtech Stocks as Government Probes Healthcare Imports

The specter of new tariffs has sent ripples through the healthcare sector, directly impacting asset performance and creating a clear divide between potential stock market winners and losers. This market volatility is a response to two concurrent national security investigations launched by the US government, targeting imported medical devices and pharmaceuticals.

Medtech Stocks Dip on Tariff Fear

The medtech industry felt an immediate chill after the US Department of Commerce initiated a Section 232 probe into the national security implications of imported medical devices, PPE, and medical consumables. Since similar investigations in other sectors have historically led to tariffs, the announcement caused a visible dip in medtech stock prices on September 25. Investors are moving away from the sector due to the possibility of new import duties and quotas being imposed, which would increase costs and disrupt supply chains for everything from pacemakers and syringes to hospital beds.

Pharma Tariff Triggers Massive Investment Shift

The pharmaceutical sector is experiencing a more dramatic, and expensive, transformation following the administration’s announcement of a 100% tariff on branded and patented drugs starting October 1, 2025. This move is designed to compel pharmaceutical companies to onshore manufacturing, leading to a massive, multi-billion-dollar reallocation of assets.

$270 Billion Asset Reshuffle

The tariff threat has spurred an unprecedented wave of domestic investment, with major pharmaceutical companies collectively pledging over $270 billion to expand US manufacturing capacity over the next decade. This is effectively a forced capital investment boom to avoid crippling import penalties.

Winners (The Insulated and Reshoring Leaders):

Vertex Pharmaceuticals is best positioned, enjoying zero tariff exposure as its manufacturing is 100% US-based.

Eli Lilly has become a leader in the domestic asset push, with recent commitments of $27 billion toward new US facilities, signaling strong confidence in its long-term, tariff-proof domestic capacity.

Other major companies like AbbVie and Pfizer are also relatively well-positioned due to their significant existing US manufacturing footprints, allowing them to better mitigate tariff impacts.

Losers (The Foreign-Dependent):

European pharmaceutical giants face the steepest challenges. Novartis and Roche are projected by analysts to face major annual losses—potentially up to $800 million and 1 billion Swiss francs, respectively—due to their heavy reliance on overseas facilities and the high cost of shifting production to the US.

GSK is viewed as having the largest systemic risk, with a substantial portion of its production coming from 31 major plants outside the US.

Vulnerable biotech companies like Amgen and Biogen also face headwinds from their reliance on foreign manufacturing and associated tax structures.

In summary, trade policy is driving substantial capital flight from imported medtech while simultaneously forcing a massive asset injection into US pharmaceutical manufacturing. For investors, success hinges on identifying companies with minimal import exposure and those making large, preemptive commitments to domestic production.