Johnson & Johnson expects $400 million in tariff-related costs, mostly related to China

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Health care giant Johnson & Johnson expects about $400 million in tariff-related costs this year.

The costs will be felt primarily within the company's medical technology unit, which makes a range of medical devices and surgical products. The most substantial impact comes from tariffs against China and retaliatory tariffs from China, said Joseph Wolk, Johnson & Johnson's chief financial officer, in a conference call with analysts following the company's latest earnings results.

The company's estimate also includes the impact from tariffs on aluminum and steel, along with tariffs against key U.S. trading partners Canada and Mexico. Johnson & Johnson said that contractual agreements already in place limit its leverage on price increases that could potentially soften the impact.

The cost estimate does not include possible tariffs on imports of pharmaceuticals. The Trump administration has launched an investigation into imports of pharmaceuticals, which is a step towards imposing tariffs.

Tariffs, especially on pharmaceutical products, could lead to supply chain issues and shortages, said CEO Joaquin Duato. He said the best way to build up manufacturing in the U.S. is through tax policy, not tariffs.

The company is investing more than $55 billion over the next four years with the goal of making all of its advanced medicines that are used in the U.S., within the U.S.