U.S. Medical Device Probe Hits Baxter, GE HealthCare, and Other Stocks

Shares of leading medical device makers fell sharply on Thursday after the U.S. Commerce Department launched a national security investigation into medical equipment earlier this month.

Stocks Slide After Section 232 Investigation

Baxter International (NYSE: BAX) dropped 3.5%, GE HealthCare Technologies (NASDAQ: GEHC) fell 5.3%, Integra LifeSciences (NASDAQ: IART) tumbled 5.3%, and ResMed (NYSE: RMD) declined 2.9%. The declines followed news of a Section 232 probe, which analysts at Needham described as “a new overhang for the already struggling medical device sector.”

Possible Tariffs on Medical Devices

The investigation is similar to earlier Section 232 reviews in the pharmaceutical and semiconductor industries. These probes assess whether imports pose national security risks and can result in new tariffs.

Needham analyst Mike Matson said the review will likely “result in additional tariffs for the industry,” though President Trump may choose a gradual approach similar to pharmaceuticals. In the short term, Matson expects medical device companies to pass on potential costs to customers through higher prices.

Analysts Offer Mixed Reactions

JPMorgan analyst Robbie Marcus gave a more cautious perspective. He noted that while the list of MedTech products under review is broad, “it’s not time to hit the panic button.” Marcus emphasized that the medical device sector has traditionally enjoyed bipartisan support.

BTIG analyst Ryan Zimmerman warned investors to stay alert, calling the probe “something MedTech investors should be aware of.” He suggested the move may give the administration more flexibility to impose tariffs without facing court challenges.

Long-Term Outlook for Medical Device Makers

If tariffs are introduced, manufacturers may increase U.S. production to reduce reliance on imports. However, analysts caution that building up local manufacturing capacity would take significant time.