Washington — The Donald Trump administration unexpectedly put a hold on steep 25 percent tariffs on injection molds imported from China in late December, a decision that industry observers say is likely to hurt American mold building companies but help U.S. plastics processors.
The announcement from the U.S. Trade Representative means that the 25 percent tariffs on injection molds — imposed in July as part of the first round of $34 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 mold making industry said it may be a response to a flood of more than 200 requests from plastic injection molding companies, many in the automotive supply chain, to exempt their specific mold imports.
The USTR announcement is broader than molds, exempting about 30 different categories of imports from the tariffs. Molds are the largest plastics-related category.
"I believe they have had so many requests from companies seeking exemptions of molds from the tariff, that the government decided to exclude molds in their entirety rather than spending resources on each individual exemption request for a mold," 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 U.S. mold builders but help U.S. plastics processors who buy molds.
"There was and is strong support among the [U.S.] mold builder community for these tariffs," Rothenbuecher wrote in an email.
Plastics processors, however, said the higher costs from the 25 percent tariffs would be hard for them to absorb, causing significant problems in their already price-sensitive businesses.
Many argued to USTR that since mold purchasing takes months and the contracts for these molds were signed before the tariff details were discussed, they could not plan for the 25 percent tariffs.
Plastikon Industries Inc., for example, asked for what it called a "one-time exclusion" for molds ordered from China in late 2017 for a project for a U.S. automaker.
"Due to the timing, significant size and technical requirements for the U.S. vehicle launch, however, the company cannot re-source the items of concern to a U.S. supplier," the company said.
It said a 25 percent 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 U.S. Inc., made similar points, arguing that higher tooling costs would make its U.S. manufacturing less competitive and risk jobs.
Plastikon said it had taken steps to source more molds in the United States.
"We fully support the strategic objectives of shifting manufacturing to the U.S. and have already taken steps to source future molds from the U.S. and from fair trade countries," Plastikon told the USTR.