Fisher & Paykel Healthcare (ASX:FPH) Navigates Tariff Fears Amid Shifting US Trade Policy

Highlights

• Tariff Impact in FY25 Expected to Be Minimal: Fisher & Paykel Healthcare does not foresee a material effect on its FY25 net profit after tax from recent U.S. tariff changes.
• Increased Exposure in FY26: Cost pressures and foreign exchange risks are anticipated to rise, especially in light of Trump-era tariff policies.
• Production Strategy Mitigates Risk: With 45% of manufacturing in Mexico and 55% in New Zealand, the company’s supply chain remains diversified under the U.S.-Mexico-Canada Agreement.

Fisher & Paykel Healthcare (ASX:FPH) has emerged as a point of relative stability amid concerns over sweeping U.S. tariff policy changes, which have unsettled investor sentiment across global markets. On a day marked by volatility dubbed “Trump Tariff Thursday,” Fisher & Paykel Healthcare’s share price remained resilient. The company addressed investor concerns directly by stating that it does not anticipate a material impact from new U.S. tariffs on its net profit after tax for the 2025 financial year, which concluded on 31 March 2025.

This near-term confidence stems largely from the company’s robust supply chain positioning and trade compliance strategies. Fisher & Paykel Healthcare manufactures approximately 40%–45% of its total product volume in Mexico, with the remaining 55% produced in New Zealand. Despite the heavy manufacturing footprint in Mexico, most of the products shipped to the United States qualify under the U.S.-Mexico-Canada Agreement (USMCA), a trilateral trade accord that offers tariff relief for compliant goods. As a result, the immediate financial impact is expected to be minimal under current tariff schedules.

However, while FY25 may escape unscathed, the outlook for FY26 introduces additional layers of uncertainty. The company has signaled that it anticipates increased operating costs and greater foreign exchange risk as macroeconomic conditions evolve. These pressures, exacerbated by heightened political tension and policy unpredictability, may affect Fisher & Paykel Healthcare’s long-term gross margin trajectory. The company cautioned that the full imposition of newly proposed tariffs may extend the timeframe required to meet internal gross margin targets.

The Mexican production base introduces a strategic dependency on the stability of the U.S.-Mexico relationship. While the USMCA provides a framework for tariff exemptions, its durability is influenced by the political climate and administrative decisions within the United States. Given that 60% of Fisher & Paykel Healthcare’s volumes destined for the U.S. market originate from Mexico, any disruption in trade policy or an escalation of tariff measures could significantly affect cost structures.

Meanwhile, production operations in New Zealand offer a relatively safer hedge. With 55% of product volumes manufactured domestically, the likelihood of deteriorating trade relations between the U.S. and New Zealand remains low, given historical stability and mutual economic interests. Nevertheless, even New Zealand operations could be vulnerable to broader shifts in global trade dynamics or protectionist agendas.

Investor sentiment currently reflects a cautiously optimistic stance. The muted market reaction suggests that the financial community remains confident in Fisher & Paykel Healthcare’s ability to navigate geopolitical challenges, especially in the short term. However, this sentiment may shift as FY26 approaches and cost escalations begin to materialise. The longer-term implications of U.S. protectionist policies, especially under a Trump-led administration, may introduce further volatility depending on how policy execution unfolds.

The company’s strategic alignment with USMCA compliance offers a significant buffer against immediate cost shocks. Yet, this alignment alone may not shield the business from secondary effects such as foreign currency swings, increased regulatory compliance burdens, and shifting demand patterns if downstream distributors and healthcare providers in the U.S. adjust procurement strategies in response to pricing changes.

As global manufacturers re-evaluate their production footprints in light of potential tariff regimes, Fisher & Paykel Healthcare’s dual-facility approach across Mexico and New Zealand highlights a diversified model that seeks to balance efficiency and risk management. This structure, while beneficial under normalised trade conditions, may require further strategic reassessment should political volatility persist beyond FY26.

The evolving nature of U.S. trade policy and its influence on multinational healthcare suppliers underscores the importance of adaptive supply chains, regulatory agility, and ongoing engagement with trade frameworks like the USMCA. While Fisher & Paykel Healthcare has demonstrated resilience, the upcoming fiscal year will likely test the company’s operational and financial elasticity.