Photo collage shows a scanning electron microscope with an old-fashioned price tag. In the background, lines go up.
Credit: C&EN/Shutterstock
Many instruments sold in the US are built using parts from all over the world. Trade policy changes could affect the prices labs pay.
Even though scientific instruments are a tiny sector of global trade, they are critical for most scientific discoveries and a large chunk of many laboratories’ spending. So as instrument makers and analysts who monitor the sector make their plans and predictions for 2025, they are watching the incoming Trump administration.
President-elect Donald J. Trump campaigned on a flat 60% tariff being placed on any goods coming from China and 10–20% on goods from all other countries. Economists from across the political spectrum have warned that these increased taxes would raise prices across the US economy.
So far, core facility directors in the US that C&EN contacted for comment say they are uncertain about what the new taxes might mean for their bottom lines. According to economists, the effect depends on where products are built and what taxes the US levies on various countries. Mary E. Lovely, a senior fellow at the Peterson Institute for International Economics, says most experts consider it likely that the tariffs on Chinese products will be levied soon after the new administration takes charge, although they may come in waves. With other countries, there may be more negotiation, making it difficult to predict how prices will change.
A tariff is assessed on the basis of where a good is made, but most instruments comprise parts made all over the world. A microscope built in Japan, Lovely says, is currently taxed as a Japanese product, even if computer chips or other parts inside are from China. But she says some lawmakers seem “determined to play whack-a-mole with Chinese value added,” and that could include attempts to trace components originating in China and levy higher taxes on those—a prohibitively complex task, Lovely says.
In aggregate, it’s not a very large exposure for us from a tariffs perspective.
Ankur Dhingra, chief financial officer, Illumina
In an investors’ conference on Nov. 20, Ankur Dhingra, the chief financial officer of the DNA sequencing giant Illumina, said the bulk of his company’s manufacturing happens in the US and Singapore. Most of what Illumina manufactures in China is also sold there. “In aggregate, it’s not a very large exposure for us from a tariffs perspective,” Dhingra said, adding that the company is exploring alternative sources for supplies and components manufactured in China, just in case.
According to Glenn Cudiamat, an analyst at TDA Research, instrument manufacturers learned during the first Trump administration and pandemic-era supply chain disruptions to mitigate disruptions in supply. “I don’t know that there will be much impact from tariffs in our industry,” Cudiamat writes in an email to C&EN. He thinks that researchers may try to stock up on reagents and consumables and perhaps even buy equipment earlier than planned, “but I hope it will not be to the level of hoarding and panic buying.”
If trading partners levy retaliatory tariffs on US goods, as Lovely expects they will, it will become harder to sell goods produced in the US in those countries. China, which now spends nearly as much on research annually as the US does, is a market where multinational instrument makers would like to grow—but they are already competing with Chinese firms. “China has always been the country where we’ve had the largest amount of competition; it’s also the country where we have had the lowest market share,” Dhingra said, adding that Illumina has taken steps to improve its relationship with regulators there and access more of the market.
Meanwhile, questions also remain unresolved regarding how much cash US research labs will be able to spend in the coming years. After Trump nominated Robert F. Kennedy Jr. as secretary of the Department of Health and Human Services, stock prices in the life sciences tool sector fell by an average of 9%, according to a report from Leerink Partners. Investors are uncertain about the future of research funding, especially through the National Institutes of Health. At the Nov. 20 investor event, Dhingra emphasized Illumina’s bipartisan connections with legislators and intention to lobby for favorable outcomes, just as many pharmaceutical executives have done. Still, he added, “in the end, if NIH funding is cut, there will be an impact to our business.”
Chemical & Engineering News
ISSN 0009-2347
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