Tariffs: €500m impact on Irish healthcare

Irish healthcare exports face €500m impact as US tariffs target medical device sector, warns Bank of Ireland’s head of Health Sector Grainne Mahon Henson.

Ireland’s healthcare sector is bracing for significant challenges as new US tariffs threaten billions in exports, with medical devices bearing the brunt of trade tensions that could reshape the country’s pharmaceutical and medical technology landscape.

According to Grainne Mahon Henson, Healthcare Sector head at Bank of Ireland, the introduction of tariffs poses substantial risks to Ireland’s critical trade relationship with the United States, particularly given that “approximately half the value of Irish exports consist of pharmaceuticals and medical devices.”

The impact is already materialisng, with companies like GE Healthcare anticipating a €500 million hit due to the new trade measures. Medical devices have emerged as the most vulnerable segment, accounting for 41% of tariffed trade valued at €7.9 billion.

“This sub sector is the most exposed, with 38% of its overall exports going to the US,” Mahon Henson noted, highlighting the sector’s heavy dependence on American markets.

While a baseline 10% tariff now applies to all goods imported into the US as of April 5th, 2025, there remains a 90-day pause on country-specific measures with a deadline of July 9th. The European Commission has suspended countermeasures for the same timeframe, creating a window for potential negotiations.

The tariff structure shows clear distinctions within Ireland’s healthcare exports. “Medical devices will incur this universal tariff, whereas pharmaceuticals products are currently excluded from these additional tariffs; however this could change in the future,” Mahon Henson explained.

Industry adaptation strategies

Healthcare companies are already implementing defensive strategies to mitigate the impact. Organisations are “adjusting exports sources for targeted markets and changing component sourcing,” while many firms are “planning to transition to local manufacturing to reduce imports from China and the US.”

The pharmaceutical sector is pushing back through diplomatic channels, with leaders from major companies including Pfizer and Eli Lilly calling on the EU to review intellectual property protection periods and streamline drug approval processes. These requests come as the companies consider redirecting €100 billion in planned European investments to the US.

Broader economic implications

Ireland’s strong economic performance in early 2025, with tax receipts rising by €3.5 billion year-on-year to reach €23.6 billion, provides some buffer against trade headwinds. The growth was bolstered by €1.7 billion from the Apple ‘State Aid’ outcome and strong employment figures.

However, Mahon Henson warns that “healthcare companies with substantial export volumes may face headwinds due to these tariffs.” The cost burden falls on US importers, likely leading to higher product prices and potentially reduced demand for Irish exports.

The domestic healthcare system may also feel indirect effects. “While tariffs on imports may not directly affect domestic healthcare services, increased costs for imported medical supplies and medications may impact budgets,” she noted, with community pharmacies potentially facing supply challenges and increased administrative burdens.

Despite these challenges, Mahon Henson emphasizes that “the healthcare sector is inherently defensive, and often shows resilience during economic downturns, making it attractive to investors seeking stable returns.”

However, she cautions that “the inter-connectedness of the Irish economy means that any long-term changes to trade could create ripple effects that are at this point difficult to quantify.”

The coming months will be critical as Ireland navigates this new trade landscape, with the July deadline for country-specific measures serving as a key milestone for determining the sector’s longer-term trajectory.