In April 2025, the United States imposed a series of tariffs affecting imports from various countries, including the United Kingdom. Notably, a baseline tariff of 10% was applied to UK exports to the US, with specific sectors such as automotive parts facing higher rates. While these tariffs primarily target goods entering the US, their ripple effects are anticipated to influence the UK healthcare sector, particularly within NHS procurement. This article provides NHS procurement professionals with an in-depth analysis of how these tariffs might affect medical supply chains, costs, and long-term procurement strategies, and highlights the role of collaboration with NHS procurement organisations, such as the NHS North of England Commercial Procurement Collaborative (NOE CPC), in mitigating these challenges.
Overview of US–UK Tariffs
Overview of US–UK TariffsRecent Developments
Baseline Tariff: Effective from 5 April 2025, the US imposed a 10% tariff on imports from the UK.
Sector-Specific Tariffs: Certain sectors faced higher tariffs; for instance, the automotive industry was subjected to a 25% tariff on vehicles and parts.
Exemptions: Pharmaceutical products were among the limited categories exempted from these tariffs.
Relevance to Healthcare
While direct tariffs on pharmaceuticals were avoided, the broader economic implications of these tariffs can indirectly impact the healthcare sector. Increased costs in manufacturing, transportation, and raw materials due to tariffs in other sectors can lead to price adjustments in medical supplies and equipment. Additionally, supply chain disruptions in industries related to healthcare can have cascading effects on the availability and cost of medical products.
Potential Effects on NHS Procurement
Supply Chain Disruptions
Global Supply Chain Complexities
Modern healthcare supply chains are intricately linked with global markets. Tariffs that affect the cost of raw materials or components sourced from the US can lead to production delays or increased costs for UK-based medical device manufacturers. This, in turn, can result in supply shortages or increased procurement costs for the NHS.
Upstream Cost Increases
Even if NHS suppliers do not directly import from the US, they may rely on components or raw materials that are affected by these tariffs. For example, a UK manufacturer using US-sourced materials now subject to tariffs may pass on the increased costs to the NHS.
Price Volatility and Budget Implications
Currency Fluctuations
Trade tensions and the imposition of tariffs can lead to currency market volatility. A weakened pound sterling can make imports more expensive, affecting the cost of medical equipment and supplies procured from abroad.
Interest Rates and Financing Costs
The economic uncertainty stemming from the imposition of tariffs has led to market volatility, influencing the Bank of England’s monetary policy decisions. Investors are anticipating potential interest rate cuts as a response to the economic slowdown induced by these trade tensions. Lower interest rates can have a dual effect on NHS procurement: while they may reduce the cost of financing for capital projects, they can also indicate a broader economic downturn, potentially leading to tighter budgets and increased scrutiny on spending.
Long-Term Contract Negotiations
Suppliers facing increased costs due to tariffs may seek to renegotiate existing contracts with the NHS to accommodate these changes. This can lead to budgetary challenges and necessitate a reassessment of procurement strategies.
Impact on Innovation and R&D
The financial strain from tariffs can reduce the profitability of UK medical technology companies, potentially limiting their capacity to invest in research and development. Over time, this could slow the introduction of innovative medical devices and technologies into the NHS.
Strategies for NHS Procurement Professionals
Diversification of Supply Chains
To mitigate risks associated with tariffs and trade tensions, procurement professionals can:
Identify multiple suppliers for critical items, reducing overreliance on any single market.
Monitor global trade policies and maintain adaptable agreements that allow for quick transitions when tariffs disrupt a particular supplier’s prices or lead times.
Strengthening Domestic Manufacturing
Encouraging domestic production of essential healthcare supplies can reduce dependence on international markets and insulate the NHS from global trade disputes. Investing in local manufacturing capabilities can also support the UK economy and create jobs.
Negotiating Flexible Contracts
Procurement teams can include tariff clauses or price adjustment mechanisms in contracts, ensuring that any sudden cost changes due to tariffs are shared or mitigated rather than borne solely by the NHS. Flexibility in contract durations may also help the NHS pivot to alternate suppliers if one becomes less competitive due to tariffs.
Collaboration with NHS Procurement Organisations
Collaborating with NHS procurement organisations can provide several advantages:
Aggregated Purchasing Power: By working together, NHS trusts can consolidate their purchasing power, potentially negotiating better terms and mitigating the impact of tariffs.
Shared Expertise: Pooling resources and knowledge allows for more informed decision-making and the development of best practices in procurement strategies.
Efficient Resource Utilisation: Collaboration helps avoid duplication of efforts and ensures that resources are used effectively, leading to cost savings and improved procurement outcomes.
The NHS North of England Commercial Procurement Collaborative (NOE CPC) exemplifies such collaboration. Hosted by Leeds and York Partnership NHS Foundation Trust, NOE CPC provides professional, flexible procurement services to the public sector. Their expert team of procurement specialists works with public sector organisations to aggregate expenditure and deliver benefits through collaborative and bespoke procurement solutions. As an NHS-owned organisation, NOE CPC offers customers the assurance of understanding the NHS and its processes, maintaining compliance, and ensuring value for money. Their solutions have delivered significant financial savings through contracts, efficiencies, innovations, and value-added benefits, which have been reinvested into the NHS.
Collaboration with Government Bodies
Regular engagement with the Department for International Trade (DIT) and other relevant agencies is essential for NHS procurement professionals to navigate the complex landscape created by US tariffs. Effective collaboration can be achieved by:
Monitoring Policy Updates: Continuously reviewing publications, guidance documents, and alerts from the UK Government related to trade policies and tariff implementations. Ensuring timely awareness of new tariff measures allows procurement professionals to anticipate changes that may impact NHS procurement activities.
Engaging in Consultations: Actively participating in consultations initiated by government bodies aimed at assessing the impact of tariffs on essential goods, including medical supplies. The NHS can use these opportunities to advocate for necessary exemptions or relief measures.
Lobbying for Exemptions: Working with the UK Government to advocate for exceptions or reduced tariffs on critical medical supplies. This can involve providing evidence-based arguments to support tariff relief for NHS goods that are essential to patient care.
Building Alliances: Coordinating efforts with other public sector organisations facing similar challenges. Aligning advocacy strategies can increase pressure on policymakers to grant exemptions or adjust tariff policies that negatively affect essential services.
Preparing Contingency Plans: Working with the DIT and related bodies to develop frameworks for managing procurement during periods of heightened trade tension. Contingency planning is essential to maintain uninterrupted access to critical medical supplies.
Recommendations
The imposition of US tariffs on UK goods presents a multifaceted challenge for NHS procurement professionals. While pharmaceuticals have been largely exempted, indirect impacts on supply chains, procurement costs, research and development, and overall financing can create significant obstacles. Preparing for such impacts requires careful planning and strategic decision-making.
Recommendations for NHS Procurement Professionals:
Stay Informed: Regularly monitor updates from credible sources, including the Department for International Trade and relevant industry associations. Awareness of ongoing negotiations and tariff adjustments is critical to proactive procurement planning.
Diversify Supply Chains: Reduce dependency on specific suppliers by sourcing from multiple markets. This approach enhances resilience against future trade disruptions.
Implement Flexible Contracting: Ensure procurement contracts include tariff clauses or price adjustment mechanisms. Flexibility is essential for mitigating unforeseen cost increases resulting from tariffs.
Collaborate with Procurement Organisations: Partner with bodies like the NHS North of England Commercial Procurement Collaborative (NOE CPC) to leverage shared expertise and aggregate purchasing power.
Advocate for Tariff Relief: Engage with government agencies to push for exemptions or reductions on essential medical supplies, using evidence-based arguments.
Plan for Economic Shifts: Recognise that tariffs may contribute to broader economic changes, such as interest rate adjustments, impacting NHS budgets and financing strategies.
Utilise Government Resources: Engage with the Department for International Trade and other relevant agencies to ensure access to the latest policy updates and support mechanisms.
By employing these strategies, NHS procurement professionals can mitigate the potential negative impacts of US tariffs and continue to secure the best value for patients and taxpayers alike.
References:
Gov.Wales – Written Statement on US Tariffs (Accessed 2025) – https://www.gov.wales/written-statement-us-tariffs
The Guardian – UK Interest Rates and Tariff Impact (Accessed 2025) – https://www.theguardian.com/business/2025/apr/08/bank-of-england-uk-interest-rates-tariff-turmoil
NHS London Procurement Partnership (LPP) – FAQs & Customer Information (Accessed 2025) – https://www.lpp.nhs.uk/media/177894/faqs-customer.pdf
UK LinkedIn – NHS Commercial Procurement Collaborative (NOE CPC) – Overview of Services (Accessed 2025) – https://uk.linkedin.com/company/nhs-commercial-procurement-collaborative
The Guardian – Trump’s Tariffs Could Hit UK Medicine Supply, Wes Streeting Warns (Accessed 2025) – https://www.theguardian.com/society/2025/apr/08/trump-tariffs-could-hit-uk-medicine-supply-wes-streeting-warnsThe Guardian
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