J&J expecting $400m hit from tariffs in 2025

Johnson & Johnson has said it expects to see a $400 million financial hit from President Trump's tariffs, which will be felt mainly in its medtech division, but acknowledged there is still a lot of uncertainty about their impact.

On its first-quarter results call, J&J executives said the company expects to exceed its revenue guidance for full-year 2025 and meet its earnings forecast, taking into account the tariff programmes that have been put in place at the moment.

Chief financial officer Joe Walk said: "I don't want to be cavalier about that. It's obvious the programme has been phased in as a partial year, and then you have mostly this being captured as cost of goods. It's going to sit on the balance sheet in inventory and be relieved to the [profit and loss] in future periods."

Its $400 million estimate includes the impact of retaliatory levies on products entering China, as well as rates on aluminium and steel, but excludes possible tariffs on imports of pharmaceuticals that are currently exempted, but now being considered by the US government.

Chief executive Joaquin Duato warned that those tariffs – if implemented – could raise the risk of some medicines becoming unavailable, noting: "There's a reason […] why pharmaceutical tariffs are zero. It's because tariffs can create disruptions in the supply chain, leading to shortages."

Trump is adamant that the policy is directed at ramping up the domestic production of pharmaceuticals and reducing the US' reliance on supplies from overseas and – while J&J has agreed to invest more than $55 billion in the US to help achieve that goal – Duato has reservations about the strategy.

"If what you want is to build manufacturing capacity in the US, both in medtech and in pharmaceuticals, the most effective answer is not tariffs, but tax policy," he told analysts on the call.

Later, he added: "I think it's also important that companies in healthcare partner with the administration to look to mitigate some of the vulnerabilities that exist today in our […] supply chain so as to avoid any continuity of supply effect."

J&J said first-quarter revenues came in at $21.9 billion, up 2.4% on the same period of 2024, which was a little above analyst expectations. It is expecting full-year revenues of $91.6 to $92.4 billion, a slight increase on its earlier projections.

Among its forecasts for the year are a $700 million contribution from recently acquired schizophrenia therapy Caplyta (lumateperone), a strong increase in sales of depression drug Spravato (esketamine) to between $3 billion and $3.5 billion, and turnover of its lung cancer combination Rybrevant (amivantamab) and Lazcluze (lazertinib) to come in at least double earlier projections of $1.8 billion.