Medical device maker Medtronic PLC (NYSE: MDT) is trying to find a way to modify its global manufacturing options to avoid the negative impact of U.S. President Donald Trump’s impending tariffs.
The company manufactures products that range from insulin pumps to surgical robots. It holds a significant presence in Mexico, and has been keeping an eye on Trump’s tariff plans. The country holds Medtronic’s third largest manufacturing facility, according to its latest annual report released earlier this month.
“We continue to look at ways to optimize our manufacturing footprint,” said Ken Washington, Medtronic’s chief technology officer.
Trump imposed 25 per cent duties on imports from Mexico and Canada, initially set to take effect in early February, but later delayed them until March 4 to allow for negotiations with both nations.
Medtronic’s Washington office did not clarify whether the company planned to include India in its strategy to refine manufacturing operations.
In 2021, Medtronic established its largest research and development center outside the U.S. in Telangana. In response to Trump’s threats to impose levies of “25 per cent or higher” on semiconductor and pharmaceutical imports, Washington said that the company would remain focused on its core work.
“A company like Medtronic can’t survive for 75 years if you don’t learn the skill of navigating the ups and downs, and ebbs and flows of different political platforms,” Washington said.
Washington stated that he was focusing on the adoption of artificial intelligence. He expects digital and AI roles to expand and digital spending to rise but did not provide specific details.
“We have set expectations that everyone should embrace AI as a way of doing business.”
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Multiple sectors face complications due to Trump tariffs
President Trump’s proposed tariffs are poised to impact several industries beyond those directly targeted.
The automotive sector, for instance, faces significant challenges due to its reliance on global supply chains. A 25 per cent tariff on imports from Mexico and Canada could disrupt the flow of parts and vehicles, leading to increased production costs and potential price hikes for consumers.
This disruption may force manufacturers to reassess their supply chains and consider relocating plants, as seen with companies like General Motors contemplating such moves if tariffs become permanent.
The energy sector is also vulnerable, particularly due to the 10 per cent tariff on Canadian energy imports. Canada supplies a significant portion of U.S. energy needs, including 61 per cent of crude oil imports. Tariffs on these imports could lead to increased energy prices for American consumers. Projections indicate gas prices could rise by up to 50 cents per gallon in certain regions.
In the aluminum industry, Alcoa Corp‘s (NYSE: AA) CEO, William Oplinger, warns that the proposed 25 per cent tariffs on steel and aluminum imports could jeopardize approximately 100,000 U.S. aluminum industry jobs.
The U.S. relies on aluminum imports, particularly from Canada and Mexico, to fill an shortfall shortfall of 4 million tons. The tariffs have prompted aluminum buyers and manufacturers to stockpile aluminum. The uncertainty surrounding the tariff’s duration complicates future investment planning.
The technology sector is not immune, as tariffs on semiconductor imports could lead to increased costs for U.S. tech companies. This may result in higher prices for consumer electronics and potential delays in product releases.
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