Tariff wars between the United States and our major trading partners pose significant challenges for Original Equipment Manufacturers (OEMs), particularly in healthcare manufacturing. For outsourced assembly and contract manufacturers, tariffs can disrupt operations, increase costs, and challenge market competitiveness.
Here are 8 major risks healthcare-focused OEMs and contract manufacturers must address—and how GMI Solutions can help mitigate them:
1. Increased Costs of Production
- Impact:
Tariffs on critical raw materials—such as medical-grade steel, aluminum, and electronic components—directly increase production costs. Healthcare machines and devices rely on high-precision parts that often come from regions subject to tariffs, making cost containment a major challenge. These rising costs are further compounded by hospitals’ limited budgets, leaving OEMs in a difficult position: increase prices and risk customer pushback, or absorb the costs and shrink already tight margins.
- What GMI brings to the table:
GMI’s global manufacturing capabilities enable production across multiple locations, including tariff-friendly regions. This flexibility allows OEMs to source materials strategically while maintaining product quality and cost control.
2. Disruption to Supply Chains
- Impact:
Tariffs force manufacturers to rethink supply chain strategies, often requiring them to shift sourcing or production locations. While this can diversify risk, it also creates short-term disruption. For healthcare OEMs producing devices like imaging systems, electromechanical cabinets, and robotic carts, even minor delays can affect delivery schedules, slow market entry, and disrupt medical providers who rely on timely equipment. Establishing new supplier relationships or qualifying alternative materials further adds time and complexity.
- What GMI brings to the table:
By offering dual-site manufacturing in North America and Asia, GMI Solutions helps OEMs adapt to shifting supply chain requirements without significant disruptions. Our ability to quickly scale production in different regions minimizes delays and keeps operations running smoothly.
3. Market Competitiveness
- Impact:
Retaliatory tariffs imposed on U.S.-manufactured healthcare equipment make it more expensive to compete in international markets. This challenge is compounded by policies such as “Made in China 2025,” a strategic initiative aimed at making China a global leader in high-tech industries, including medical devices. Chinese manufacturers, heavily supported by subsidies and favorable trade conditions, gain a competitive advantage in pricing and market entry. As a result, U.S. healthcare OEMs face stiffer competition both abroad and domestically, where Chinese products can be imported at lower costs.
- What GMI brings to the table:
GMI’s CCC-certified manufacturing facilities in China offer OEMs the opportunity to meet local market demands while maintaining compliance with Chinese regulations. Simultaneously, our North American facilities allow production for domestic markets, ensuring a balanced and competitive approach.
4. Reduced Profit Margins
- Impact:
Tariff-driven cost increases often cannot be fully passed to customers in the highly cost-sensitive healthcare industry. Hospitals and clinics demand affordable solutions, forcing OEMs and contract manufacturers to absorb additional expenses. For outsourced manufacturers producing high-mix, low-to-mid-volume products—like robotic medical carts and electromechanical systems—these cost pressures can severely erode profit margins.
- What GMI brings to the table:
GMI works with OEMs to optimize designs for manufacturing (DfM) and improve production efficiencies. By focusing on streamlined assembly processes and reducing unnecessary costs, we help protect margins without compromising product quality or delivery.
5. Regulatory and Compliance Challenges
- Impact:
Tariff wars often come with additional regulatory hurdles that can delay or block market entry. For healthcare manufacturers exporting to China, obtaining CCC certification is a mandatory and sometimes time-consuming process. Without this certification, medical equipment cannot be sold in one of the world’s fastest-growing healthcare markets. Navigating these regulations while adapting to changing trade policies adds further complexity and costs.
- What GMI brings to the table:
GMI’s CCC-certified facilities streamline compliance processes, reducing approval timelines and ensuring that healthcare products meet Chinese regulatory standards. Our experience in navigating trade regulations allows OEMs to maintain market access efficiently.
6. Strategic Uncertainty
- Impact:
Unpredictable tariff policies make long-term planning a challenge for healthcare manufacturers. Investments in new products, facilities, or market expansions may be delayed, as OEMs struggle to justify large capital expenditures in such an uncertain environment. Additionally, healthcare manufacturers may feel pressure to relocate production outside the U.S. to avoid tariffs, incurring significant transition costs.
- What GMI brings to the table:
GMI Solutions provides global flexibility with production capabilities across North America and Asia, helping OEMs pivot their operations in response to trade shifts. This adaptability minimizes risk and allows manufacturers to remain responsive to new opportunities.
7. Impact on Innovation
- Impact:
Rising production costs due to tariffs often mean cuts to other areas, such as research and development (R&D). In healthcare manufacturing, innovation is critical to improving treatment technologies, reducing costs, and meeting strict regulatory requirements. If OEMs divert resources to managing tariffs or shifting supply chains, they risk falling behind in developing advanced solutions, such as next-generation medical machines, smart robotics, and IoT-enabled devices.
- What GMI brings to the table:
With seamless end-to-end program management, GMI allows healthcare OEMs to focus on their core innovation efforts. Our expertise in building complex products ensures OEMs can bring innovative solutions to market without disruption.
8. Erosion of Customer Relationships
- Impact:
Healthcare providers rely on consistent delivery of high-quality equipment to meet patient care demands. Delays caused by supply chain disruptions or increased costs from tariffs can harm relationships between OEMs and their customers. Hospitals may look for alternative suppliers offering lower costs or faster lead times, particularly when faced with tight operating budgets and rising demand for medical technology.
- What GMI brings to the table:
GMI’s dual-site production capabilities and focus on operational efficiency ensure reliable product delivery to customers, even during trade disruptions. By producing closer to the end market when needed, we help OEMs improve lead times and maintain trust with healthcare providers.
GMI Solutions: Your Trusted Partner in Healthcare Manufacturing
At GMI Solutions, we specialize in supporting healthcare OEMs with:
- Medical devices and carts
- Electromechanical cabinets and systems
- Embedded computers for critical healthcare applications
Our global footprint, certified facilities, and expertise in cost optimization make us the ideal partner for navigating tariff challenges. Learn how we can help you optimize costs, maintain production, and deliver high-quality healthcare products worldwide.