The news: Abbott and Johnson & Johnson reported lower-than-expected costs from tariffs during Q2 earnings this week.

Digging into the details: Both medical device companies now expect to pay less due to President Trump's tariffs, estimating around $200 million each for 2025.

• Abbott anticipates just under $200 million in tariff-related costs, mostly in the second half of the year. CEO Robert Ford noted tariffs were “less of a headwind” than initially expected (the company forecast a hit of a few hundred million earlier this year).
• J&J slashed its estimated costs for its medical devices division in half, from $400 million to $200 million. Its CFO told Reuters that a pause on Chinese tariffs helped along with J&J’s ability to absorb extra costs.

Yes, but: Abbott expects to lose $1 billion in sales this year. This is due to several factors: tariffs, fewer sales of COVID-19 tests, less business with labs in China, and reduced US foreign aid for HIV testing. Despite these challenges, Abbott still plans for its sales to grow by 6% to 7%. The company also announced it will open a new factory in Georgia in 2028 to make heart devices as a way to bypass tariffs.

Why it matters: Tariffs have been a major worry for companies in pharma and medical products. While Trump has promised to levy 200% taxes on medicines, these won’t kick in for a year or more, offering at least a temporary reprieve. For context: Medical devices and diagnostic tests currently have a different levy with a baseline 10% tariff, plus additional fees depending on the country.

Our take: It seemed like medical device companies would be the hardest hit by tariffs initially. So the positive spin from Abbott and J&J is encouraging. But tariffs are still costly. While device and diagnostic companies talk broadly about plans to mitigate tariff effects, raising prices for healthcare systems and consumers isn’t off the table.

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