For mold makers — like the rest of industry — the redo of NAFTA and major new U.S. tariffs on Chinese imports is good news or bad news, depending on each company's perspective.
But on balance, both deals are good news for North American mold makers. Of course, an exception could be toolmakers that also have operations or partnerships with counterparts in China. But the majority of mold makers — still mostly made up of small and midsized companies with hands-on owners and management — should benefit.
The big story is the rewritten NAFTA, now called the harder-to-pronounce USMCA. The new acronym stands for the United States-Mexico-Canada Agreement. The three countries hammered out the deal right before the Oct. 1 deadline after more than a year of on-again, off-again negotiations.
Key details will impact the important automotive industry, including the mandate that 40-45 percent of automotive content be made by workers earning at least $16 per hour. That will greatly boost pay in Mexico and add costs to automakers there, but it should encourage more car and truck manufacturing in the United States and Canada. USMCA also will significantly increase the North American content of vehicles to qualify for zero tariffs, to 75 percent, from 62.5 percent under NAFTA.
If approved by lawmakers in all three countries, USMCA removes a huge level of uncertainty for the North American auto industry, which is a major force in plastics manufacturing. For one thing, President Donald Trump had threatened to impose 25 percent tariffs on auto imports from Mexico and Canada if the countries were unable to come to an agreement.
"The big story was NAFTA," said consultant Laurie Harbour, who closely follows the tooling industry. "NAFTA was a potential detriment for the toolmaking industry, especially for Canada. But now that that's resolved, it's a good story."
Canadian mold makers faced potential tariffs on molds shipped to the United States, Harbour said. The resolution is good for Canada, she added.
Steel tariffs are still in place for Canada, which could impact some U.S. mold makers. But the good feelings over USMCA could result in new talks to roll them back.
The successful North American trade agreement means that President Trump can turn his full attention to his biggest global-trade goal: China.
On Sept. 17, Trump announced major new tariffs covering another $200 billion in Chinese imports. Tariffs now cover about half of China's imports. Trump warned China that if it retaliated, he would slap tariffs on another $276 billion worth of Chinese imports. Tariffs would cover essentially all of China's imports to the United States.
"In general, it's the China tariffs that will yield potentially positive results for a mold maker, here in the U.S. particularly," said Harbour, president and CEO of Harbour Results Inc. in Southfield, Mich.
She said mold makers have seen tooling work remain in the United States, and some work is coming back from China. Harbour told Automotive News, a sister publication of Plastics News, that some of her clients have been asked not to source tools they need for future vehicle programs from China.
But Harbour warns that Chinese mold makers will find ways to offset the higher costs.
"The caution is that the Chinese mold industry is going to continue to price competitively," Harbour said. Chinese mold prices have gradually gone up because of demand from the global market, she said.
"But if they're faced with the tariff issues, they are going to continue to reduce their prices, to not lose market share," she said.
And the auto sector needs all the tooling it can get right now. U.S. sales are softening after recent record years, but the mix continues to move to sport utility vehicles and crossovers, heavy users of plastics. A vehicle redesign could involve $200 million in new tooling. A single front fascia assembly can require more than 35 molds.
Harbour has warned before about a looming tooling shortage. North American automotive toolmakers are running at high capacity, and they will need to invest in additional capacity, advanced metalworking technology and, perhaps most importantly, finding new mold makers to meet the demand.
That's a big order. And China is not about to go away as a source for molds.