MW GE Healthcare sees tariffs costing $500 million in 2025, then much less next year

By James Rogers

Bilateral China tariffs account for the majority of the impact, about 75%, the company said

The impact of the global tariffs war will cost GE Healthcare Technologies Inc. around $500 million in 2025 at current rates, with most of the impact coming in the second half of the year, the medical technology company said on Wednesday.

The company also said it expects that in 2026, tariff costs will decline given actions it's taking to mitigate the impacts, such as shifting manufacturing to make more products where they are consumed, and by finding multiple sources for its supplies.

Also on Wednesday, GE Healthcare $(GEHC)$ reported first-quarter earnings that beat expectations, but cut its full-year profit outlook due to the expected tariff costs.

The stock rose 3.8% in afternoon trading toward a three-week high.

Speaking during a conference call to discuss the results, Chief Financial Officer Jay Saccaro said that GE Healthcare had a "very small" impact from tariffs in the first quarter of around $10 million.

"But as we move into the second quarter and the third and fourth quarter, the impact is more dramatic," he added, according to a FactSet transcript.

In the second quarter, the company expects a little bit less than $100 million of impact, and then, in the third and fourth quarters, around $200 million of impact. On a per-share basis, the cost for 2025 is expected to be about 85 cents.

Saccaro said the bilateral China tariffs will account for the majority of the costs, at around $375 million, or about 65 cents a share.

"It really goes both ways," he said. "We do ship a fair amount of product from U.S. to China and vice versa. We have not included any unplanned exemptions and we're not really seeing a positive impact from exemptions, nor are we counting on that."

Related: Merck absorbs $200 million in tariff costs into its earnings and full-year outlook

Given the projected tariff impact, the company now expects full year adjusted earnings per share of $3.90 to $4.10, below its prior forecast of $4.61 to $4.75 a share.

Saccaro said if the tariff rates with China change, for example, if the rate on imports falls to 45% from 145% today, or if the rate on China exports drops to 25% from 125% today, that would actually be a benefit to the EPS outlook of about 40 cents.

He stressed, however, that he's not suggesting that's a likely scenario. He just provided a "hypothetical scenario" to illustrate how the tariff impact is "a big number for us."

Meanwhile, for 2026, the company expects the tariff impact to diminish, as there are a number of supply-chain adjustments it can make. Saccaro said that includes looking to shift manufacturing to more "local for local," and seeking opportunities for multiple sourcing.

"So, as we look at 2026, the first quarter of the year will have a similar level of impact to the fourth quarter [of 2025]," Saccaro said. "But then, the mitigations that we're putting in place start to rapidly impact that as it draws down over the course of the rest of the year."

Related: Tariffs won't boost U.S. manufacturing - tax cuts will, Johnson & Johnson CEO says.

The healthcare and pharmaceuticals sectors have been weighing the cost of tariffs in recent earnings reports. Last week drugmaker Merck & Co. $(MRK)$ said that its 2025 outlook absorbs an estimated $200 million in additional costs for already implemented tariffs. Earlier this month medical-technology and drug company Johnson & Johnson $(JNJ)$ estimated that tariffs could result in about $400 million in extra costs.

For the first quarter to March 31, the company's adjusted first-quarter profit, which excludes nonrecurring items, rose to $1.01 from 90 cents a share in the prior year's quarter, beating the FactSet consensus estimate of 91 cents a share.

Revenue was $4.78 billion, up from $4.65 billion in the same period last year, and above the FactSet consensus estimate of $4.66 billion.

Related: GE Vernova now sees tariff costs of up to $400 million but keeps outlook intact

Shares of GE Healthcare, which spun off from General Electric in 2023, has lost 9.6% in 2025, while the S&P 500 index SPX has declined 6%.

Last week power and renewable-energy company GE Vernova Inc. $(GEV.AU)$, which separated from General Electric in early 2024, said that it expects to be hit with tariff costs of up to $400 million. The stock has rallied 11.8% this year.

And GE Aerospace $(GE)$, which was formerly General Electric, said last week that it estimated a $500 million cost for tariffs. The stock has run up 20.1% this year.

-James Rogers

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April 30, 2025 14:39 ET (18:39 GMT)

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