06/17/2025 | News release | Distributed by Public on 06/17/2025 08:07
Veterinary practices, already struggling with staffing shortages, declining visits, and rising costs, are bracing for potential added financial strain.
U.S. Federal Reserve officials, at their May 6-7 meeting, outlined the prospect of rising unemployment and higher inflation this year. Specifically, Fed officials "projected a 'markedly' higher inflation rate this year due to the impact of tariffs and a job market 'expected to weaken substantially' with the unemployment rate rising above estimates of full employment by the end of this year and remaining there for two years, according to news reports.
Under the White House's new trade policy, the average U.S. tariff rate leapt from 2.5% to roughly 27%, the highest since 1903. Some imported veterinary drugs and products are exempt from the import tax increase but many others, including raw drug ingredients and basic medical supplies, are not. As of mid-June, the Trump administration's tariffs remain in effect despite ongoing legal challenges.Economists across industries are all wresting with what the broader economic implications will be from the tariffs, both initially and as time goes on. AVMA Chief Economist Katelyn McCullock says that there will likely be universal impacts felt by most veterinary practices, but other impacts may be more specific to geographic location, client demographic, or even patient mix.
On April 2, President Donald Trump declared a national trade emergency and imposed an across-the-board 10% tariff hike on nearly all imports, with some exceptions for specific trading partners and energy goods. Under the new U.S. trade policy, the average U.S. tariff rate leapt from 2.5% to roughly 27% from January to April, the highest since 1903, according to the Yale Budget Lab. The White House defended its new policy as necessary to protect U.S. manufacturing against cheap foreign labor and to encourage investment in domestic industries.
Then on May 28, the U.S. Court of International Trade (CIT) ruled that many of the wide-ranging tariffs were unlawful. That same day, a federal district court in Washington, D.C., issued a near-identical ruling but paused enforcement of its order for 14 days. Just 24 hours later, on May 29, an appellate court intervened, staying the New York decision and allowing the contested tariffs to remain in place while the government's appeal proceeds.
The U.S. and China had reached a tentative trade framework in June whereby the U.S. would apply a flat 55% tariff on Chinese imports, while China would impose a standardized 10% tariff on U.S. goods. As of press time, the agreement still required formal approval by both governments.
"The Trump administration is hoping that, over time, this will lead to Americans having more stable access to critical goods manufactured domestically," said Matthew Salois, president of Veterinary Management Group, a professional network supporting veterinary practices. "Those benefits are ultimately long term in nature because it takes years, literally, to build up any sector of an economy, as well as the supply chains to support them."
In the meantime, McCullock says the tariff's impact hinges on how high the tariffs are placed, what alternative suppliers exist, and how long the tariffs are in place.
"The immediate impact is more akin to a trickle than a firehose. Product pipelines have supplies at various stages of the supply chain and in U.S. warehouses that may have been imported before the tariffs took effect. Suppliers too may have increased orders ahead of the tariffs to help mitigate risk, which may mean prices are not adjusted immediately to reflect the tariff price," she explained. "However, once the supply chain works through pre-tariff product, expect prices to jump."
The U.S. veterinary services market relies on a broad range of foreign-sourced supplies, nearly all of which are subject to tariff increases, according to an overview compiled by Dr. Duffy Jones, co-founder of DVMSuccess, for the Georgia VMA. These include finished veterinary drugs; medical products, such as surgical gloves and imaging equipment; active pharmaceutical ingredients (API); and animal-derived products used in drug manufacturing. However, as of June, most finished veterinary drug imports were exempted from tariffs.
Veterinary practices must continue showing clients the value of their services and carefully decide how and when to increase their prices, economists say. With that in mind, client communication is essential in uncertain economic times."This means veterinary medicines as finished drugs were carved out to avoid harming patients and animals," Dr. Jones writes. "However, a wide range of related goods-chemicals, ingredients, and equipment-are explicitly included. The Federal Register notice confirms that 'the proposed product list excludes pharmaceuticals, certain pharmaceutical inputs, select medical goods …" implying that anything not in those exempt categories would be subject to the new tariffs."
However, items such as bile, glands and other animal products used in pharmaceutical products, and bovine semen are on the list of affected goods.
"In summary, while your clinic's bottled medications may not directly get a tariff, many supplies and the ingredients used to make those medications are impacted," according to Dr. Jones.
As veterinary practices prepare for the potential economic instability, experts urge planning with foresight, precision, and transparency.
McCullock suggests reviewing the tariff list above, checking with distributers about alternatives to current inventory, assessing immediate practice needs, and making a plan for how to manage cost increases.
Regarding inventory, buying ahead may make sense for certain situations and products, but be aware of tying up capital and overbuying products, she says, otherwise practices could get stuck with a lot of overpriced inventory.
Additionally, she suggests evaluating what can be done from a management standpoint. For example, in many practices, disposable products are time savers, but what happens if costs rise astronomically? Is it better to return to an alternative method that no longer relies on single-use items?
"Planning can help make decisions easier as the uncertainty of the future unfolds and avoids radical reactions to evolving or new information," she said.
With the cost of imported goods such as medications, diagnostics, and medical tools expected to increase, Salois advised clinics to reassess their pricing structures. "Conduct a thorough margin analysis to identify areas where profitability is at risk. Then you can make informed decisions about whether fee increases are required," he said.
McCullock warned, though, that passing higher costs along to clients unilaterally may be the wrong approach.
"Clients will be dealing with increasing prices not only from veterinary services but many consumer goods. Uneasiness, cutbacks in lifestyle, and a more precarious financial position across U.S. income demographics will be resistant to large price increases without a change in value," she said. "We could end up in an economic situation where veterinary services are competing for every dollar against spending categories it hadn't previously needed to. It will be important for veterinary clinics to continue to show clients their value and carefully choose how and when to increase their prices."
To that end, experts emphasized that client communication must remain a priority.
"Transparency is essential," Salois said. "Clients are already sensitive to the cost of veterinary care. It may be uncomfortable, but you can have a simple conversation explaining that macroeconomic changes like tariffs are affecting our costs, and that's why prices may need to increase."
Industry consultant Dr. Peter Weinstein added that now is not the time to shy away from candid discussions.
"You cannot overcommunicate with clients. Let them know how much you care. Be there for their questions. Be there to support them, because they're feeling the economic pinch, too," he said.
The news surrounding tariffs and policy updates are in an evolving period, McCullock said.
"Although we anticipate prices will rise in association with the tariffs, the magnitude of those impacts is difficult to say. In Trump's previous administration, tariffs were used to negotiate new trade deals and concessions with global partners and the success of those actions are largely audience dependent. Where this ends up long term is too early to say," she said.