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Donald Trump’s threat to impose tariffs on medical devices will drive up prices for US patients and damage its health supply chains, Costa Rica has warned.
Washington began last month to investigate the national security impact of importing medical equipment, a procedure already used to impose tariffs on cars, steel and other goods.
However, the trade minister of Costa Rica, which exports more than $5bn of medical devices to the US each year, has warned that those levies would undermine Trump’s pledge to ‘make America healthy again’.
With a population of just over 5mn and a burgeoning medical device industry, the Central American country is uniquely exposed to the threat.
“US companies in Costa Rica, and Costa Rican labour, saves American lives. And what is more important and more relevant to the national security of a country than the health of your own population?” trade minister Manuel Tovar Rivera said in an interview with the Financial Times.
Washington announced the threat of the “Section 232” tariffs on medical devices last month, giving the industry until October 17 to respond to a consultation on the measures.
Advamed, the main US lobby for medical device makers, questioned the need for tariffs last month, noting that only 30 per cent of devices used in the US were imported. “Lower tariffs will fuel more manufacturing and job growth in the US,” chief executive Scott Whitaker said in a statement.
MedTech Europe, the main EU lobby, said it was also “concerned” about the threat of further tariffs, warning in a statement of “adverse impact on patient access to fundamental medical technology”.
The medical device industry is critical to Costa Rica’s economy, accounting for more than 40 per cent of exports in 2023, with a total value of $7.6bn.
Major US medical device makers use Costa Rica as a base for manufacturing and research, including Boston Scientific, Edwards Lifesciences Corporation and Johnson & Johnson Medtech, which announced its largest investment outside the US in a big new Costa Rican plant in 2023.
Tovar said his government, alongside major US companies, is lobbying both the White House and Congress to consider the negative implications of adding tariffs to medical device supply chains.
Costa Rica is already battling to remain competitive against regional rivals after being hit with a 15 per cent tariff by Trump in August — leaving it at a disadvantage against the Dominican Republic, which is on 10 per cent, and Mexico, which pays no US tariffs on medical device exports.
“We’re concerned,” Tovar added. “Already medical devices have been taxed with a 15 per cent tariff. That puts us at a disadvantage with direct competitors.”
Tovar said he doubted that tariffs would help Trump force medical device manufacturing back to the US, given the complexity of their plants and the scarcity of skilled labour in the US.
He said there was no evidence of US manufacturers pulling out of Costa Rica — and hinted that one manufacturer was quietly pushing ahead with a major investment. But, he said, companies were showing “shyness” about making investment commitments while the situation is so uncertain.
Tovar urged Trump to consider the interests of US consumers and manufacturers and the value of working with regional allies. “We understand ‘America first’, but that doesn’t mean ‘America alone’,” he said.
