For medtech global dynamics, the more things change, they more they seem to stay the same. Since we last discussed the impact of President Donald J. Trump’s ever-evolving tariff policies on the medtech industry and mergers/acquisitions, there have been some updates. Over the past month, the U.S. tariff policy has been subject to the administration’s daily whims and business relationships with other countries. The United Kingdom has agreed to lower the average tariff on American goods from 5.1% to 1.8% in return for the United States cutting U.K. automobile levies by 17.5% and eliminating the 25% tariffs on U.K. steel and aluminum. In addition, America and China agreed to a 90-day pause on the highest tariffs from both countries, with the United States lowering its levy on most imported Chinese goods to a combined 30%. 

And that is only the beginning. More changes are ahead, as President Trump has threatened to reimpose new tariff rates without completing trade deals with other countries. The uncertainty created by the administration’s capricious tariff tango is far from over. Whether medtech is granted a tariff exemption is still to be determined (fingers crossed).

We have been repeatedly asked about the tariffs’ meaning for the medtech industry and their potential impact on M&A. One of the most frequent questions is whether conditions are right to sell a medtech business. Well, it depends on the company, but quite honestly, there is seldom ever a bad time to sell a business in the medtech industry. Every market or governmental change—good or bad—creates a new opportunity. Of course, with the help of a professional M&A advisor, it’s important to consider the actual “situational intelligence” (SI) for any business scenario and company performance. Our recent MPO webinar on “The DNA of a Successful M&A Process” explains how a good buy-and-sell process can result in an excellent outcome in most situations.

As discussed at MPO’s recent Medtech Forum in Costa Rica, U.S.-driven tariff economics are triggering supply chain impacts like those the industry experienced during COVID-19. The supply chain is being tested again, as is the ability to sell to and support customers internationally. The difference between the COVID-19 era and Trump Tariffs 2.0 is that countries are still exchanging goods (as opposed to the days when nothing moved into or out of China), though it may be more expensive depending on key supplier location. Unfortunately, the current tariff policies will likely have a negative impact on foreign demand for U.S.-made products overall, but that waning demand is not expected to affect life-saving healthcare products (economic stability and politics have historically had little influence on medtech industry growth). It’s possible that tariffs will complicate the import and export of U.S.- made products because tariffs often are tied directly to heightened customs enforcement and compliance requirements. This can cause delays at ports, which in turn, create longer lead times, increased administrative overhead for logistics and finance teams managing cross-border documentation, and complications for regulated imports, especially for critical or high-risk devices.

Unquestionably, the change in tariffs will affect most, if not all, medtech companies in some way. If so, can M&A (including strategic partnerships) provide a positive solution for the industry and some of its players? 

Yes, it can. As we discussed in last month’s column, medtech’s demographics enable the industry to grow despite any type of global upheaval. The need for innovation, an aging world population, and the consistent requirement for devices, diagnostics, and treatments help keep the industry a “safer” haven for M&A. While all industries are bracing for the eventual impact of the Trump administration’s tariffs, the medtech sector simply has a stronger foundation for navigating the new policies’ changeable ups and downs. Based on these factors, medtech companies can certainly reap the rewards of an M&A transaction during extreme market volatility. In fact, in some cases, it might even be their best SI move.

M&A could benefit medtech stakeholders in various ways.

European-based companies that currently sell only in the European Union but want to break into the U.S. market won’t have a tough time finding a growth or acquisition partner, as U.S.-based private equity firms (and some strategics) are also looking for “local” investments in Europe. For larger medtech companies seeking out the right inorganic portfolio additions, acquisition targets will undoubtedly have to prove their prowess in controlling costs, weathering changes, and most importantly, derisking their supply chains. Acquisitions that allow the buying firm to prioritize nearshoring (i.e., Mexico, Costa Rica, Eastern Europe) will likely also gain multiple suitors. Several deals reflected such strategic thinking before the tariffs took effect: Resonetics’ purchase of Costa Rican medtech manufacturer Agile MV provided Resonetics with access to nearshore production free of U.S.-Chinese tariffs (both ways). This year, contract manufacturer Arterex acquired plastics injection molding firm Micromold; under the deal’s terms, Micromold will continue its operations under Arterex’s Formula Plastics Division in Tecate, Mexico. Going forward under the Trump administration, buyers will prefer local (or regional) “American” production to avoid import expenses or EU-based manufacturing to serve Europe. 

Tariffs are creating opportunities for companies considering entry into the U.S. market, making the landscape increasingly favorable for forming strategic partnerships. Organizations with a scalable yet profitable proven technology that meets a U.S. market need also make for great P.E. investor targets. Now more than ever, it is enticing for P.E. firms to seek opportunities upon which the U.S. market can be capitalized. Establishing a U.S. footprint allows companies to expand to the American market while minimizing crossfire in the tariff wars. 

The reverse is also true. U.S.-based companies that want to expand to other markets such as Europe will likely attract interest from EU-headquartered P.E. firms, regardless of their specific location. The Trump administration has several years at the helm to make impactful decisions; thus, the opportunity exists to become “local” to other countries. Foreign companies and P.E. firms alike are eager to find opportunities that leverage other economies and their resources in ways that are not solely dependent on the United States. Medtech is an ideal opportunity, as it is an industry that is expanding globally.

In general, supply chain changes being created by current geopolitical realities require more than tactical adjustments—they require a coordinated and strategic response. Customers may be focused on near-term financial pressures such as increased landed costs, extended lead times, or sudden shifts in sourcing availability but they are also simultaneously re-evaluating the long-term viability of their suppliers and partners. In this environment, maintaining cost-competitiveness cannot be the only strategy. 

To remain relevant and resilient, companies must reposition themselves within the value chain. Relocating or diversifying manufacturing capacity, consolidating suppliers, or forming regionalized partnerships should all be considered. M&A is and should be considered a viable path forward that looks beyond the knee-jerk reaction to the immediate cost burden risks posed by these tariff changes. Long-term advantages must be proactively cultivated and situationally intelligent.

Disruptions of this magnitude often leave a lasting mark. Customers will reconfigure sourcing models or re-qualify vendors and these dynamics will create the opportunity to capitalize on the changing landscape. As shown in past economic cycles, M&A will serve as an avenue to adapt to these changes and increase sustainability for businesses and customers alike. It will be interesting to watch what new partnerships/acquisitions are created from these international tariff undercurrents.

MORE FROM THESE AUTHORS: Buy or Sell? A Medtech Dealmaking Guide for Turbulent Times

Florence Joffroy-Black, CM&AA, is a longtime marketing and M&A expert with significant experience in the medical technology industry, including working for multi-national corporations based in the United States, Germany, and Israel. She currently is CEO at MedWorld Advisors and can be reached at florencejblack@medworldadvisors.com.

Dave Sheppard, CM&AA, is a former medical technology Fortune 500 executive and is now focused on M&A as a managing director at MedWorld Advisors. He can be reached at davesheppard@medworldadvisors.com.