Baxter International expects tariff impact of $60 to $70 million this year
Tariffs will likely cost Deerfield-based Baxter International $60 to $70 million this year, the company's chief financial officer said in an earnings call Thursday.
Baxter expects to see most of the impact from increased tariffs in the second half of the year, said Joel Grade, Baxter executive vice president and chief financial officer. Baxter makes IV fluids, a number of pharmaceuticals and other hospital products.
'We are able to mitigate a portion of these impacts,' Grade said. ' … Currently a majority of Baxter's products sold in the U.S. are manufactured in the U.S. and made largely from U.S.-made components. However, international procurement is part of our business operations and as such we are impacted from the U.S. and retaliatory tariffs that have been issued.'
Though only a small percentage of Baxter's total sales are in China, 'given the magnitude of the tariffs that have been enacted between the two countries, these tariffs now account for nearly half of the total impact,' he said.
President Donald Trump has proposed sweeping tariff increases on a number of countries in an effort to boost jobs and manufacturing the U.S. Last month, Trump suspended most of those tariffs – except for China – for 90 days. The Trump administration has not yet increased tariffs on pharmaceuticals, but is now investigating how imports of pharmaceuticals and pharmaceutical ingredients affects national security.
Baxter's assumptions do not include any potential changes to tariffs on pharmaceutical products, Grade said.
Baxter is considering a number of strategies to mitigate the impact of tariffs, including carrying additional inventory, identifying alternative suppliers, alternative shipping routes and 'targeted pricing actions,' Grade said. Baxter is also working with its trade association partners to advocate for possible exemptions, he said.
'Some of these actions will be able to realized more near-term to help mitigate the impact in 2025, and others will require more time to be implemented but will help offset the impact in future years,' Grade said.
Grade's comments about tariffs came during otherwise positive quarterly results Baxter, which saw its net income increase $126 million in the first quarter of this year, compared with in increase of $39 million in the first quarter of last year. The quarterly results were Baxter's first since selling off its kidney care business to global investment firm Carlyle for $3.7 billion earlier this year. That business is now called Vantive and its headquarters is in the former Caterpillar building in Deerfield.
In recent weeks, a number of companies have been quantifying the impacts of tariffs. The CEO of north suburban-based Abbott Laboratories said during an earnings call last month that he expected tariffs to cost the company 'a few hundred million dollars' in the second half of this fiscal year.
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