Johnson & Johnson Warns of $400 Million Profit Loss in 2026 Due to Global Tariff Impacts

Amid sudden changes in global trade policy, tariffs have become a key variable affecting corporate development.

On April 15 local time, healthcare giant Johnson & Johnson warned in its earnings report that tariffs are expected to result in a $400 million profit loss for the company by 2026, with the medical device division being hit the hardest.

Johnson & Johnson CFO Joseph Wolk said on the earnings call that the company's medical technology division would bear the brunt of the impact from the tariffs on goods and raw materials announced by the Trump administration, as well as retaliatory measures internationally.

"The $400 million loss covers the impact of various tariffs, including import tariffs from Canada and Mexico that go beyond the scope of the North American trade agreement, as well as international steel and aluminum tariffs (the latter having a relatively smaller impact). However, the tariffs between China and the US undoubtedly account for the largest portion, with the most significant impact on US products exported to China," Volker added.

Despite Trump's announcement earlier this month to exempt pharmaceutical products from multiple tariffs, the medical device sector has not been spared. Currently, the White House has proposed imposing tariffs on medicines, and relevant investigations are underway.

Facing immense pressure from tariffs, companies are heavily restricted in their response measures. Volker reluctantly stated that due to medical device shipping contracts having been signed long ago, the company has very limited room to maneuver in terms of adjusting prices and shifting costs. For now, the company can only first quantify the impact of the tariffs in 2026, and then closely monitor whether there will be opportunities to negotiate with other countries, as well as any actual changes in policy by the second half of 2025.

Johnson & Johnson CEO Joaquin Duato sharply questioned the U.S. tariff policy. He frankly stated that if the Trump administration hopes to shift more production to the U.S., imposing tariffs on medical products is by no means the right approach.

Duato further pointed out that tariffs are highly likely to disrupt supply chains, leading to product shortages. He emphasized that favorable tax policies are a more effective way to boost the manufacturing capacity of the U.S. medical technology and pharmaceutical industries. Duato specifically mentioned that since the tax reform policy introduced by Trump in 2017, there has been a significant increase in manufacturing investment in the medical technology and pharmaceutical sectors.

While issuing this warning, Johnson & Johnson also announced better-than-expected financial results for the first quarter of 2025. In this quarter, Johnson & Johnson's total sales reached $21.9 billion, representing a 4.2% increase from early 2024 after adjusting for international currency fluctuations. Global medical technology revenue was $8 billion, with an adjusted growth rate of 4.1%.

This growth was partly driven by the acquisitions of Abiomed and Shockwave, companies in the cardiovascular disease space, as well as the development of the surgical vision and wound closure businesses. However, one-time costs in the orthopedics division partially offset these gains, as the division nears the end of a two-year restructuring plan aimed at divesting less profitable business areas.

Despite a decent performance in the first quarter, the warning of a $400 million tariff loss has undoubtedly cast a shadow over Johnson & Johnson's future development.

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