Dutch medical technology giant Philips is bracing for a financial hit as new tariffs squeeze the industry. Philips announced today that it expects up to a $340 million impact from tariffs this year, forcing the company to revise down its profit expectations — even though its sales guidance remains unchanged.
For the first quarter, Philips reported $4.7 billion in revenue, matching Wall Street forecasts, and beat earnings estimates with adjusted earnings per share of 28 cents, compared to the expected 25 cents. However, the company has now lowered its projected profit margin for 2025 to between 10.8% and 11.3%, down from the previous estimate of 11.8% to 12.3%.
Speaking to Yahoo Finance, CEO Roy Jakobs explained that while sales remain strong, the financial pressure from tariffs — especially the reciprocal levies between the U.S. and China — is taking a toll on profits. The U.S. currently has a 145% tariff on Chinese imports, and China has responded with a 125% tariff on U.S. goods, putting companies like Philips, which relies heavily on the Chinese market, in a tough position.
Philips is not alone in this struggle — the entire medical technology sector has been pushing for exemptions from the Trump administration’s tariffs introduced on April 2, but so far, those efforts have been unsuccessful.
Jakobs emphasized that Philips is accelerating efforts to regionalize its supply chains, aiming to manufacture and source closer to its key markets in the U.S., Europe, and Asia. The company already operates 46 sites in the U.S. and has just announced a new cardiac device manufacturing facility in Minnesota.
Jakobs said Philips is focused on stringent cost-saving measures to avoid passing tariff costs onto customers through price hikes. He added that the company’s push for regional supply chains began during the pandemic, when the vulnerabilities of global supply networks became painfully clear.
With 80% of Philips’ products tied to medical devices, a tariff exemption could significantly ease the financial strain, Jakobs noted. In the meantime, he said the company remains in active discussions with both U.S. and Chinese officials, though no breakthroughs have been announced yet.
We will keep track of this story and bring you the latest updates as they unfold.
Reporting by Katy Moore.
