Johnson & Johnson has warned of a $400 million tariff cost in 2025, largely driven by China-related levies. The financial hit is expected to weigh on its medtech division, with limited room to maneuver on pricing.
Tariff Burden Highlights Geopolitical Risk for Medtech Supply Chains
Johnson & Johnson expects to absorb $400 million in tariff-related costs this year, with its medtech unit bearing the brunt, CFO Joe Wolk confirmed Tuesday. Speaking first on CNBC and later on the company’s Q1 earnings call, Wolk said the estimate reflects tariff measures already announced, including steep China levies, steel and aluminum tariffs, and exclusions from the U.S.-Mexico-Canada Agreement.
The China tariffs — both U.S. and retaliatory — are likely to be the most damaging, applying to American-made products exported to China. “That is probably the most substantial out of all the tariffs,” Wolk said, describing them as “penalizing” to the business. He also noted the phased-in nature of the tariffs means costs will show up gradually, initially as inventory on the balance sheet before flowing through the P&L.
With existing contracts limiting price flexibility, the company has few levers to offset the increase. Wolk declined to forecast tariff-related costs beyond 2025, calling any such attempt “way too speculative.”
Despite Cost Pressures, Medtech Sales Continue to Climb
Even with tariffs looming, Johnson & Johnson posted a 2.5% year-on-year increase in Q1 medtech sales, reaching $8.02 billion. Cardiovascular sales rose sharply by 16.4% to $2.1 billion, while orthopedics declined 4.2% to $2.24 billion. The company also nudged its full-year sales outlook upward.
As the first major medical device player to report earnings this cycle, J&J’s outlook is closely watched. Its experience may signal what’s ahead for other device makers with significant China exposure — particularly if pricing constraints and supply chain pressures persist.
Strategic Planning, Not Panic
For supply chain leaders, the $400 million tariff impact at J&J is a timely reminder of the fragile nature of cross-border trade dependencies — especially when geopolitics enters the fray. With pricing levers tied up in long-term contracts, contingency planning, supplier diversification, and geographic hedging are increasingly critical for resilience. While J&J’s scale allows it to absorb shocks better than most, others in the sector should be evaluating exposure now, before guidance revisions are forced upon them.
