Align Technology, known for dental products like Invisalign, is closely watching the evolving tariff situation between the U.S. and Mexico. The company manufactures its products in Mexico to keep costs lower before shipping them to the U.S. and other countries.
Recently, President Trump announced a 25% tariff on imports from Canada and Mexico. However, he paused the tariff for Mexico after discussions with President Claudia Sheinbaum. Sheinbaum’s agreement to send 10,000 troops to the border helped ease tensions. Following this, Canada also decided to delay its retaliatory tariffs.
In a press release, Align Technology stated, “The U.S.-Mexico tariff situation remains quite unpredictable.” The company reported a revenue of $4 billion for fiscal 2024, with $3.2 billion coming from clear aligners and nearly $769 million from systems and services.
“Even with a 25% tariff, it remains more cost-effective to ship from Mexico.” Align Technology
Navigating Tariffs
Align Technology prides itself on being flexible. It believes shipping clear aligners from Mexico is still cheaper, even if a tariff is applied. Factoring in various costs, including freight from Poland, Mexico remains the better option for production.
The cost of making clear aligners involves materials, labor, and shipping. The company expects that if tariffs hit, they will apply to the transfer prices from Mexico, not including other overheads or treatment costs.
Gurtej Varn, a wealth advisor, noted that uncertainty can be tough for businesses. However, larger companies like Align are usually more equipped to handle these challenges.
Global Expansion
Align Technology is expanding its global footprint with a facility in Poland that serves parts of Europe, the Middle East, and Africa. Current political tensions hint at possible future tariffs on EU goods as well.
Align remains committed to China, having opened its first treatment planning facility there in 2017. Recently, the company announced a significant investment in Sichuan, China, to establish a hub for medical device production.
The U.S. recently imposed a 10% tariff on certain goods from China, prompting China to retaliate with tariffs on U.S. imports. This back-and-forth continues from earlier trade tensions under the previous administration.
Understanding how these tariffs might affect the Canadian dental industry is crucial for local businesses.
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