Minnesota medical device companies react to the Trump tariffs
Minnetronix Medical — one of 500 medical device companies based in Minnesota — isn’t expecting a major impact from the Trump tariffs because they’re local.
“So much of our suppliers are domestic, they’re based in the U.S.,” explains Yolanda Robinson, director of sourcing for the company. “When you look at supply chains, you’re trying to have the least amount of disruption.”
China has imposed its own tariffs on some American goods after the president’s 10% tariffs on China went into effect overnight.
He paused 25% tariffs against Canada and Mexico for a month after they agreed to increase border security.
Minnetronix’s 400 employees in St. Paul make surgical devices ranging from optical scopes to parts for wearable medical devices.
Robinson says 60% of their suppliers are from the Midwest and about 10% from China.
The idea, the company says, is to be self-sustaining long before the current tariff debate.
“Unrelated to the tariffs, for the last four to five years, companies have been working to stabilize their supply chains,” explains Minnetronix CEO Nicole Yung. “More control of how and where they’re sourcing.”
The Department of Employment and Economic Development says Minnesota exports about $4.2 billion worth of optic and medical devices each year.
The state imports about $5.1 billion worth.
One concern by the Advanced Medical Technology Association, a Washington, D.C. industry group, is that tariffs on China, Mexico and Canada could lead to higher patient costs.
The group is calling for an exemption for medical devices.
“Our industry is heavily regulated. FDA decides what products can be put on the market, and the Medicaid, Medicare, and the VA largely determine the reimbursement for procedures using Medtech products,” association CEO Scott Whitaker said in a statement. “This means tariffs impact American companies similarly to an excise tax, which would lead to less R & D/innovation, layoffs, higher prices for the above-mentioned payors and patients…”
“The FDA doesn’t just regulate your invention, they also regulate your manufacturing process,” explains John Spry, a finance professor at the University of St. Thomas. “Plus, a tariff is just a tax, so when you’re talking about tariffs, you’re talking about a tax and that can raise the costs for the buyer, too.”
For these med tech companies, it’s the electronics — the circuit boards and microprocessors that make these devices work.
They often come from China.
“Those boards, the components for those boards, are actually coming from China,” Robinson notes. “So, there are chips and different things of that nature on those boards.”
Nonin Medical makes non-invasive medical devices to check for heart rate, blood flow and oxygen levels.
The Plymouth-based company manufactures all the parts of its devices in-house.
“We’ve been very intentional about manufacturing exclusively in the U.S.,” says CEO John Hastings. “So, we do all our manufacturing right here in the state of Minnesota. Our supply chain is very much based in the U.S.”
“Minnesota is really known for high-value-added… a lot of value per worker kind of manufacturing,” Spry adds. “China, Mexico, they’re more known for making disposable products. When you’re talking about medical devices, especially implantable medical devices, that’s the opposite of disposable. You really want quality.”
Medtronic and other Minnesota companies say they’re keeping a close watch on what happens with China because of those all-important electronics that go into those devices.
“When you get 3-4 layers deep into the supply chain, there are certain electronic components where China becomes almost unavoidable,” Hastings says.