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Philips has become the latest company to reveal the impact that tariffs will have on its business, forecasting a €250m–€300m ($284m–$340m) headwind in 2025 despite “substantial mitigations”.
The Dutch medtech giant remained firm on its sales growth for the year ahead, predicting an increase of 1–3% as per its first quarter (Q1) earnings report. However, Philips’ full-year margin range was not left untouched, with the company cutting it by one percentage point, down to 10.8–11.3% from 11.8–12.3%.
The 2025 outlook was set against Q1 revenue that was down 2% from the same period in 2024, totalling €4.1bn.
Philips’ calculation is based on the current tariffs between the US and China and between the US and the rest of the world. The company also based its forecast on the expected resumption of existing international tariffs later this year.
US President Donald Trump’s ongoing trade war has brought instability to many industries, with healthcare being no exception. His sweeping tariffs have disrupted medical device supply chains globally. Levies placed on China have particularly impaired procurement channels with components of devices made in the Asian country. Retaliatory tariffs and increased anti-corruption drives imposed by the Chinese Government have also significantly affected market dynamics.
In an earnings call, Philips chief financial officer Charlotte Hanneman commented that the US-China tariffs account for most of the headwinds expected by the company. Philips stated that it continues to anticipate 2025 performance will be skewed towards the latter part of the year, with Q2 showing modest improvement. However, Hanneman admitted that tariffs will have a more pronounced effect in the second half of the year.
“In an uncertain macro environment that has intensified due to the potential impact of tariffs, we are driving profitable growth, and we are focusing on what we can control,” CEO Roy Jakobs said on the earnings call.
Shared pain in Trump’s trade battlefield
Shares in nearly all the major medical device players have already taken a hit this year as companies grapple with the fallout from Trump’s trade war. Zimmer Biomet lowered its 2025 earnings forecast in its Q1 earnings report, predicting a $60m-80m headwind due to the tariffs. GE HealthCare, for whom China is a key market for diagnostic imaging products, expects a greater impact, bracing itself for a financial setback of around $500m. Robotic surgical system developer Intuitive, despite a strong Q1 on the back of a widening launch of its latest da Vinci product, lowered its full-year profit margin because of tariffs.