Washington — The Donald Trump administration unexpectedly put a hold on steep 25% tariffs on injection moulds imported from China in late December, a decision that industry observers say is likely to hurt American mould building companies but help US plastics processors.
The announcement from the US Trade Representative means that the 25% tariffs on injection moulds — imposed in July as part of the first round of $34 billion (€30 billion) in duties on Chinese imports — will be suspended for at least one year.
USTR did not explain its decision, but one attorney for the mould making industry said it may be a response to a flood of more than 200 requests from plastic injection moulding companies, many in the automotive supply chain, to exempt their specific mould imports.
The USTR announcement is broader than moulds, exempting about 30 different categories of imports from the tariffs. Moulds are the largest plastics-related category.
"I believe they have had so many requests from companies seeking exemptions of moulds from the tariff, that the government decided to exclude moulds in their entirety rather than spending resources on each individual exemption request for a mould," said H. Alan Rothenbuecher, a lawyer for the Indianapolis-based American Mold Builders Association. "No one knows for sure why, but that is my opinion."
Rothenbuecher, a partner with the Cleveland-based law firm Benesch, Friedlander, Coplan & Aronoff LLP, said the ruling will hurt US mould builders but help US plastics processors who buy moulds.
"There was and is strong support among the [US] mould builder community for these tariffs," Rothenbuecher wrote in an email.
Plastics processors, however, said the higher costs from the 25% tariffs would be hard for them to absorb, causing significant problems in their already price-sensitive businesses.
Many argued to USTR that since mould purchasing takes months and the contracts for these moulds were signed before the tariff details were discussed, they could not plan for the 25% tariffs.
Plastikon Industries Inc., for example, asked for what it called a "one-time exclusion" for moulds ordered from China in late 2017 for a project for a US automaker.
"Due to the timing, significant size and technical requirements for the US vehicle launch, however, the company cannot re-source the items of concern to a US supplier," the company said.
It said a 25% tariff would "impart significant economic hardship," possibly forcing it to cancel the multiyear contract with the automaker and risking the jobs of 600 workers at one of its plants in Kentucky.
Other companies, including plastics housewares maker Keter US Inc., made similar points, arguing that higher tooling costs would make its US manufacturing less competitive and risk jobs.
Plastikon said it had taken steps to source more moulds in the United States.
"We fully support the strategic objectives of shifting manufacturing to the US and have already taken steps to source future moulds from the US and from fair trade countries," Plastikon told the USTR.