You might expect the largest U.S. manufacturer of plastics equipment, Milacron Holdings Corp., to come out 100 percent in favor of the Trump administration's proposed tariffs on Chinese made plastics equipment.
But it's not quite that simple.
Milacron, in comments filed with the U.S. government ahead of a May 15 hearing on the tariffs, opposed some of them and favored others.
It took a smorgasbord approach, saying it favored tariffs on finished Chinese plastics machinery that it competes directly against.
But then it argued that, because of the global nature of its supply chains, that tariffs should not be enacted on the Chinese-made components that it relies on heavily. Otherwise, it said its costs would rise and its equipment would be less competitive globally.
Similarly, one of the sector's largest trade groups, the Plastics Industry Association, took a nuanced position.
It told the office of the U.S. Trade Representative that while it has concerns about Chinese trade practices, its membership is split and it urged the government to take a more targeted approach than tariffs that "put the country at risk of a trade war."
In short, caution was the word of the day from some of the larger players in the industry, as companies and Washington geared up for the U.S. government's official hearing on the tariffs.
Milacron said about 15 to 20 percent of its roughly $500 million in annual supply chain purchases come from China, and much of that can't be readily sourced outside China.
"The imposition of tariffs on these components will severely disrupt our supply chain and drive our costs up, which in turn will impede growth, raise prices to American consumers, and make us less competitive globally in comparison with our competitors, and particularly those competitors in low-cost markets," the company said.
It estimated the Trump administration's 25 percent tariffs on its supply chain, which competitors in other countries would not have, would increase its costs by more than $7.35 million.
"[That] would increase the selling prices to our consumers and make our products less competitive, thereby jeopardizing Milacron's global sales and costing U.S. jobs," the company said.
European and other non-Chinese competitors will still be able to buy Chinese-made components without the 25 percent tariff the Trump administration wants to put in place, and be able to export their machines to the U.S. more competitively, Milacron said.
But the company also favored keeping President Donald Trump's proposed tariffs on finished plastics machinery from China, telling the USTR that those tariffs would "offset the advantages Chinese manufacturers obtained through unfair trade practices, thereby ensure Milacron's continued growth and competitiveness in the global market."
It said that Beijing's Made in China 2025 policy, including a focus on machine tools and automation, put Milacron's investments in the United States at risk.
"A check on unfairly traded Chinese imports [of molding machines] has become critical to allow Milacron to safeguard its U.S. operations and work forces," the company said.
The Washington-based Plastics Industry Association said that while it shared concerns about intellectual property theft in China and whether Beijing favors domestic industries, the tariffs as proposed are too broad and would lead to price increases in the plastics industry supply chain.
It argued that the tariff talk is already hurting job growth.
"The threat of tariffs has served to increase uncertainty throughout the industry, which in turn has bred caution related to increased investment and job growth," the group said.
