Company: ISRG
Filing Date: 2025-04-23
Form Type: 10-Q
Source: 0001035267-25-000109
Chunk: 35

Company: INTUITIVE SURGICAL INC
Filing Date: 2025-04-23
Form: 10-Q
Item: Item 1
Chunk 35
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 dates, including an exemption for any goods that are within the scope of the United States-Mexico-Canada Agreement (“USMCA”). We currently manufacture a significant majority of our instruments and accessories in Mexicali, Mexico, most of which are certified under the requirements of USMCA and, therefore, have not been subject to the recently imposed tariffs. As a result, the impact of tariffs on us was not material in the first quarter of 2025.

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On April 2, 2025, the U.S. imposed a 10% universal tariff on all imports that are not subject to the USMCA. The U.S. announced additional tariffs that vary by country, which are currently paused for 90 days. We import some raw materials and finished goods from outside of the U.S., which are subject to these tariffs, including our endoscopes, a majority of which are manufactured in Germany. We anticipate that some of our suppliers will incur incremental tariffs and may pass on those additional costs to us.

On April 7, 2025, the U.S. imposed a tariff on all imports from China, currently up to 145%. Our operations involve importing certain raw materials and finished goods from China, which are subject to the U.S. tariff. Concurrently, China has imposed a 125% tariff on all imports from the U.S. We import sub-assemblies to support our local da Vinci Xi surgical system manufacturing. Additionally, we sell U.S.-manufactured da Vinci Xi surgical systems into China. Both imports are subject to the Chinese tariff. We expect these tariffs to have a significant impact on the product cost of our da Vinci Xi surgical system in China, potentially hindering our competitiveness in securing future tenders in the region.

Based on these recently announced and implemented global tariffs, and assuming such tariffs remain in place, we anticipate a significant increase in our cost of revenues for the second half of 2025, which will impact our results of operation. The ultimate impact of changes to tariffs and trade barriers will depend on various factors, including the timing, amount, scope, and nature of any tariffs and trade barriers that are implemented.

Macroeconomic Environment

Our future results of operations and liquidity could be materially adversely affected by uncertainties surrounding macroeconomic and geopolitical factors both in the U.S. and globally. These uncertainties include any introduction or modification of tariffs or trade barriers, supply chain challenges, inflationary pressures, elevated interest rates, and disruptions in commodity markets stemming from conflicts, such as those between Russia and