Tariffs on Chinese Producers
Tariffs have increased the cost of buying products from China. Components commonly used in injection molded products have been affected as well. These components include terminals that are used in electrical components, various inserts and other materials produced in China. At this time the tariff adds approximately 10% to the cost of the good sold but this could increase to 25% after 2019. Raw materials such as steel have higher tariffs.
A tariff of 25% on Imported Chinese steel has also been put into place. This added cost is cause for concern to molders who use imported Chinese steel to build their tooling. Naturally the injection mold industry is heavily dependent on steel for the production of their tools, for small precision close tolerance molds the raw material cost is only 10% of the total mold costs. Steel cost is a larger percentage of the cost for Large molds and molds that have less stringent quality requirements. For those molders who import finished mold tooling, the cost could be much higher, adding upwards of $10,000 to the mold cost. The good news is that the tariffs on steel produced elsewhere have been lifted. Steels produced in Mexico, Canada and Europe are not affected by these tariffs.
PPT works with local sources for tooling and materials so thus far we have not seen a big impact on tooling costs. Inserts however are another story, early in 2018 we immediately began to see tariff costs passed down from suppliers. Where possible, we searched for alternative sources for inserts and terminals that could be produced in the USA or Mexico.
While it appears that both China and the USA will eventually agree on a new trade deal, nobody can predict when. Until then, there will be pressure to use alternative sources produced anywhere but China.