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Trade Truce Hope: How US-China Talks Could Boost Healthcare ETFs
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The White House announced yesterday that U.S. President Donald Trump will hold a bilateral meeting with Chinese President Xi Jinping on Oct. 30 at the Asia-Pacific Economic Cooperation (APEC) Summit in South Korea. This high-stakes meeting has renewed hopes about a possible de-escalation in the ongoing trade war between the world’s two largest economic powerhouses.
A positive outcome — particularly a tariff reduction or a long-term trade rapprochement — from next week’s meeting could provide a significant boost to Healthcare Exchange-Traded Funds (ETFs).
The healthcare sector, which relies heavily on global supply chains, has been facing increasing pressure from tariffs that have raised input costs for everything from medical devices to pharmaceuticals. Prominent healthcare ETFs like Health Care Select Sector SPDR Fund (XLV - Free Report) , iShares U.S. Healthcare ETF (IYH - Free Report) , and Vanguard Health Care ETF (VHT - Free Report) , which hold large U.S. pharmaceutical and medical device manufacturers, stand to benefit most from reduced trade uncertainty.
But before analyzing these ETFs individually, let us delve deeper into why the U.S.-China trade talks hold such immense importance for these ETFs’ growth prospects, considering these funds’ huge stakes in U.S. healthcare companies.
US Healthcare’s Reliance on China
America’s healthcare system is significantly intertwined with Chinese manufacturing, making it highly vulnerable to trade disruptions. While the United States is a major global producer, the nation’s dependence on China for key components, especially Active Pharmaceutical Ingredients (APIs) and medical devices, is substantial.
Data from recent years highlights this reliance. For instance, as per the American Hospital Association’s May 2025 report, America gets nearly 30% of its APIs from China, whereas, as per a 2023 Department of Health and Human Services estimate, over 90% of generic sterile injectable drugs — including many chemotherapy treatments and antibiotics — depend on APIs from either India or China.
And not just API, other vital medical consumables, ranging from gloves to syringes, have been making their way from China to America over the past decade, making the U.S. healthcare sector immensely dependent on its Chinese counterpart. Evidently, as per an October 2025 report by the Coalition for a Prosperous America (“CPA”), a U.S. organization representing exclusively domestic producers across various sectors and industries, nearly 99% of medical gloves used in the United States are imported, and the upstream nitrile-butadiene rubber (NBR) feedstock used to make nitrile gloves is dominated by China. The same report also stated that China accounted for approximately 60% of total U.S. syringe import volume in 2024.
On the other hand, as per the International Trade Administration’s September 2025 report, China surpassed Canada and the Netherlands, becoming the United States’ largest export destination of pharmaceutical products. So, not only does America import a large share of its medical supplies and APIs from China, but the U.S. healthcare sector is also dependent on Beijing for market access when it comes to selling its products internationally.
As a result of this dependence, large-cap pharmaceutical and medical device stocks such as Johnson & Johnson ((JNJ - Free Report) ), which have complex global supply chains that use Chinese-sourced materials, expressed concern about facing the brunt of the U.S. import tariffs on Chinese products.
For instance, in April 2025, JNJ announced its expectation of $400 million tariff-related costs to impact its 2025 results following the tariff imposition by the U.S. government. Similarly, in April, GE HealthCare ((GEHC - Free Report) ) announced that it expects a total tariff impact of about $500 million for the year, primarily driven by U.S.-China bilateral tariffs, which will account for almost $375 million of this impact.
Against this backdrop, the current situation of a possible great truce between the two nations should be highly beneficial for Healthcare ETFs, as any tariff reduction would immediately reduce supply-chain costs and eliminate the lingering uncertainty that dampens the sector’s growth.
ETFs in Focus
In light of renewed hopes of a possible trade tension between the United States and China, you can keep these ETFs in your watchlist:
Health Care Select Sector SPDR Fund ((XLV - Free Report) )
This fund provides exposure to pharmaceuticals; health care equipment and supplies; health care providers and services; biotechnology; life sciences tools and services; and health care technology industries. Its top three holdings include U.S.-based Eli Lilly (12.30%), Johnson & Johnson (8.74%) and AbbVie (7.60%).
It has assets under management (AUM) worth $36.93 billion. The fund charges 8 basis points (bps) as a fee.
This fund provides exposure to U.S. healthcare equipment and services, pharmaceuticals, and biotechnology companies. Its top three holdings include U.S.-based Eli Lilly ((LLY - Free Report) ) (11.94%), Johnson & Johnson (8.41%) and AbbVie (7.34%).
It has net assets worth $2.93 billion. The fund charges 38 bps as a fee.
This fund provides exposure to U.S. companies that manufacture health care equipment and supplies or that provide health care-related services, and companies that are primarily involved in the research, development, production, and marketing of pharmaceuticals and biotechnology products. Its top three holdings include U.S.-based Eli Lilly (10.33%), AbbVie (5.76%) and United Healthcare (4.94%).
It has net assets worth $15.3 billion. The fund charges 9 bps as a fee.
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Trade Truce Hope: How US-China Talks Could Boost Healthcare ETFs
The White House announced yesterday that U.S. President Donald Trump will hold a bilateral meeting with Chinese President Xi Jinping on Oct. 30 at the Asia-Pacific Economic Cooperation (APEC) Summit in South Korea. This high-stakes meeting has renewed hopes about a possible de-escalation in the ongoing trade war between the world’s two largest economic powerhouses.
A positive outcome — particularly a tariff reduction or a long-term trade rapprochement — from next week’s meeting could provide a significant boost to Healthcare Exchange-Traded Funds (ETFs).
The healthcare sector, which relies heavily on global supply chains, has been facing increasing pressure from tariffs that have raised input costs for everything from medical devices to pharmaceuticals. Prominent healthcare ETFs like Health Care Select Sector SPDR Fund (XLV - Free Report) , iShares U.S. Healthcare ETF (IYH - Free Report) , and Vanguard Health Care ETF (VHT - Free Report) , which hold large U.S. pharmaceutical and medical device manufacturers, stand to benefit most from reduced trade uncertainty.
But before analyzing these ETFs individually, let us delve deeper into why the U.S.-China trade talks hold such immense importance for these ETFs’ growth prospects, considering these funds’ huge stakes in U.S. healthcare companies.
US Healthcare’s Reliance on China
America’s healthcare system is significantly intertwined with Chinese manufacturing, making it highly vulnerable to trade disruptions. While the United States is a major global producer, the nation’s dependence on China for key components, especially Active Pharmaceutical Ingredients (APIs) and medical devices, is substantial.
Data from recent years highlights this reliance. For instance, as per the American Hospital Association’s May 2025 report, America gets nearly 30% of its APIs from China, whereas, as per a 2023 Department of Health and Human Services estimate, over 90% of generic sterile injectable drugs — including many chemotherapy treatments and antibiotics — depend on APIs from either India or China.
And not just API, other vital medical consumables, ranging from gloves to syringes, have been making their way from China to America over the past decade, making the U.S. healthcare sector immensely dependent on its Chinese counterpart. Evidently, as per an October 2025 report by the Coalition for a Prosperous America (“CPA”), a U.S. organization representing exclusively domestic producers across various sectors and industries, nearly 99% of medical gloves used in the United States are imported, and the upstream nitrile-butadiene rubber (NBR) feedstock used to make nitrile gloves is dominated by China. The same report also stated that China accounted for approximately 60% of total U.S. syringe import volume in 2024.
On the other hand, as per the International Trade Administration’s September 2025 report, China surpassed Canada and the Netherlands, becoming the United States’ largest export destination of pharmaceutical products. So, not only does America import a large share of its medical supplies and APIs from China, but the U.S. healthcare sector is also dependent on Beijing for market access when it comes to selling its products internationally.
As a result of this dependence, large-cap pharmaceutical and medical device stocks such as Johnson & Johnson ((JNJ - Free Report) ), which have complex global supply chains that use Chinese-sourced materials, expressed concern about facing the brunt of the U.S. import tariffs on Chinese products.
For instance, in April 2025, JNJ announced its expectation of $400 million tariff-related costs to impact its 2025 results following the tariff imposition by the U.S. government. Similarly, in April, GE HealthCare ((GEHC - Free Report) ) announced that it expects a total tariff impact of about $500 million for the year, primarily driven by U.S.-China bilateral tariffs, which will account for almost $375 million of this impact.
Against this backdrop, the current situation of a possible great truce between the two nations should be highly beneficial for Healthcare ETFs, as any tariff reduction would immediately reduce supply-chain costs and eliminate the lingering uncertainty that dampens the sector’s growth.
ETFs in Focus
In light of renewed hopes of a possible trade tension between the United States and China, you can keep these ETFs in your watchlist:
Health Care Select Sector SPDR Fund ((XLV - Free Report) )
This fund provides exposure to pharmaceuticals; health care equipment and supplies; health care providers and services; biotechnology; life sciences tools and services; and health care technology industries. Its top three holdings include U.S.-based Eli Lilly (12.30%), Johnson & Johnson (8.74%) and AbbVie (7.60%).
It has assets under management (AUM) worth $36.93 billion. The fund charges 8 basis points (bps) as a fee.
iShares U.S. Healthcare ETF ((IYH - Free Report) )
This fund provides exposure to U.S. healthcare equipment and services, pharmaceuticals, and biotechnology companies. Its top three holdings include U.S.-based Eli Lilly ((LLY - Free Report) ) (11.94%), Johnson & Johnson (8.41%) and AbbVie (7.34%).
It has net assets worth $2.93 billion. The fund charges 38 bps as a fee.
Vanguard Health Care ETF ((VHT - Free Report) )
This fund provides exposure to U.S. companies that manufacture health care equipment and supplies or that provide health care-related services, and companies that are primarily involved in the research, development, production, and marketing of pharmaceuticals and biotechnology products. Its top three holdings include U.S.-based Eli Lilly (10.33%), AbbVie (5.76%) and United Healthcare (4.94%).
It has net assets worth $15.3 billion. The fund charges 9 bps as a fee.