Reshoring’s Paradox: Why Section 232 Tariffs May Not Bring Medtech Manufacturing Home

The logic behind Section 232 tariffs is simple on paper: make imports more expensive, and companies will build the alternative at home. It worked, more or less, as the stated goal for steel and aluminum in 2018. The Trump administration is betting the same mechanism will work for medical devices, with a national security investigation into PPE, consumables, and medical equipment that has been hanging over the industry since September 2025.

But medtech isn’t steel. A year into the broader tariff push — and with a device-specific Section 232 proclamation still pending — the evidence so far suggests the reshoring premise doesn’t hold for this industry the way policymakers hoped. If anything, the tariffs are proving how hard it is to bring medical device manufacturing home, not how easy.

The compliance wall

The core obstacle isn’t cost or willpower — it’s regulation. Medical devices are among the most heavily regulated products in the U.S. economy, and moving production isn’t a matter of switching a purchase order to a different factory. Changing a manufacturing site, a supplier, or in many cases even a component often requires new FDA validation, inspection, and compliance work. For complex devices — imaging systems, pacemakers, insulin pumps, heart valves — that process can take months or years, and qualified suppliers of precision components and electronics aren’t easily swapped without triggering exactly that regulatory review.

That’s a fundamentally different calculus than, say, an apparel company shifting a garment order from Vietnam to Guatemala. It’s also why the response so far has looked so different from other tariff-exposed industries. Pharmaceutical companies, facing their own Section 232 tariffs (100% on patented drugs and APIs, effective July 31, 2026), have announced billions of dollars in new U.S. manufacturing investment. Medtech hasn’t. Industry advisers describe the sector’s response as “targeted shifts, not sweeping relocations” — simpler, lower-cost products moving between low-tariff sourcing regions, while complex devices largely stay put because relocating them isn’t feasible on tariff timelines.

Absorb, don’t reshore

So what are device makers actually doing instead? Mostly, absorbing the cost. Analysts and industry advisers tracking the sector describe companies avoiding price increases to hospitals and health systems, and avoiding cuts to R&D, instead squeezing efficiency elsewhere in the business — procurement, logistics, overhead. For some of the largest device makers, the tariff hit to annual earnings runs from $200 million to $500 million, according to PwC’s health industries practice — real money, but so far treated as a cost of doing business rather than a trigger for relocating factories.

There’s also a legal wrinkle that’s undercut the urgency: in February 2026, the Supreme Court ruled the administration lacked authority under the International Emergency Economic Powers Act to impose the tariffs it had been using, entitling medtech companies to potentially $2.6 billion in refunds. The administration pivoted quickly to Section 122 authority (a capped, time-limited tariff tool) and expanded Section 301 investigations to keep duties in place — but the churn itself has been a lesson for the industry: build for durability, not for whatever the current legal mechanism happens to be. Companies investing in a new U.S. plant on the assumption that today’s tariff structure holds for the five-to-ten-year payback period of that investment are making a bet on a policy environment that has already changed shape twice.

The industry’s counter-argument

Trade groups have been explicit that more tariffs could backfire on the reshoring goal itself. The Medical Device Manufacturers Association has warned that extending Section 232 tariffs to devices and consumables risks disrupting “a globally integrated industry that already meets domestic demand” — and could push companies to stop using U.S. plants to serve export markets, since those exports would face retaliatory tariffs abroad while the domestic plant pays more for imported components. That’s the paradox in its starkest form: a policy meant to grow U.S. manufacturing could instead make U.S. manufacturing less globally competitive, shrinking the very export business that supports domestic plants and jobs.

AdvaMed’s response has leaned toward negotiated exemptions rather than resistance — pushing for reciprocal tariff relief with allied trading partners, phased implementation, and continuation of duty drawback programs that let exporters recover duties paid on inputs. Notably, some analysts don’t expect Section 232 to land hard on devices at all. RBC Capital Markets’ Shagun Singh has said medical devices aren’t a sector “the Trump administration is looking at negatively and wants to single out” — suggesting the September 2025 investigation may end up functioning more as leverage in broader trade negotiations than as a prelude to blanket device tariffs.

What reshoring actually looks like here

Where the industry is expanding U.S. capacity, it’s happening selectively, in categories where deeper technical collaboration or regulatory familiarity gives American production a real edge, not as a wholesale reaction to tariff math. Some companies are diversifying supplier geography (adding secondary suppliers in multiple countries) rather than consolidating onshore, which hedges against tariff and trade-policy volatility without betting everything on one jurisdiction.

The pharma playbook, mega-investments tied to most-favored-nation pricing commitments and exemptions for companies building U.S. plants — is the model device makers may eventually be offered too, according to trade lawyers tracking the parallel investigations. But even that template assumes a level of production flexibility that heavily regulated device manufacturing doesn’t easily offer. Until the regulatory friction changes, tariffs alone look more likely to compress medtech margins than to relocate its factories.

Sources: MedTech Dive, Manufacturing Dive, Supply Chain Dive, Healthcare Dive, Federal Register, AdvaMed, Medical Device Manufacturers Association, Crowell & Moring, Baker Donelson.