Steel and Aluminum Tariffs
Some Background on Molds
Building molding tools is a one-off event. You spend the $tens of thousands and the tool lasts a certain amount of throughput dependent upon material molded (some being more difficult or corrosive) and care. The numbers of cavities will impact costs. Too many and it increases cost of the tool and the size of the press you may use. Too few and you may incur additional costs in overtime and potentially wear and tear. The balance of the tool is dependent up on the number of cavities. You build 2, 4. 8. 16. etc. cavities. Yazaki build a 12-cavity tool to supply three suppliers with a component. Two is bad enough and three made it worse. Yazaki had planning issues and had issues planning automotive volumes. This is extraneous to what the author is discussing. Although poor planning can increase costs too.
Whether you mold in Thailand, Philippines, Malaysia, China, or the US, the cost of molding is in the Overhead. Overhead is less overseas. If you have to assemble in the US, are you going to ship parts by ocean or air. Guess, which is cheaper. Figure a minimum of five weeks (probably more) of ocean transportation (ship, dock, customs, etc.) before you get the components by truck. What if there is a delay is at the port?
Tools are a one up cost. How you plan and where you manufacture can make a big difference. I used to cost model plastic and rubber parts. I still have the cost model I used.
Impact of Steel and Aluminum Tariffs on US Plastics Industry, Plastics Today, David Hutton
American Mold Builders Association supports tariffs on steel and aluminum that, it says, would level the playing field for American mold makers. Not everyone is on board, however.
The Trump administration’s 25% tariffs on imported steel and aluminum are set to take effect on March 12, prompting concerns over rising costs and production delays. The overall economic impact remains uncertain.
President Donald Trump has continued to voice strong opinions on tariffs, threatening to impose 25% tariffs on the European Union. During a cabinet meeting, he claimed that the 27-nation bloc was formed to “screw the United States.”
The president has once again threatened to impose 25% across-the-board tariffs on US neighbors Canada and Mexico by March 4, for now, ending a monthlong suspension of the tariffs, the Associated Press reported on Wednesday.
Amid these threats, the tariffs on steel and aluminum could have a more immediate impact on the plastics industry. Steel and aluminum are primary materials in the production of molds for industries such as automotive, aerospace, and consumer goods. Mold makers, who rely heavily on imported metals, warn that the tariff hike could lead to higher prices for their products, potentially making US manufacturers less competitive globally. However, the tariffs could also provide some relief against cheaper products being dumped into the American market, according to one trade organization.
Strong support from American Mold Builders Association
Kym Conis, managing director of the American Mold Builders Association (AMBA), a trade organization dedicated to enhancing the competitive advantage of US mold builders, said the organization continues to monitor tariffs applied to Chinese molds and the reinstatement of the Section 232 tariffs on steel and aluminum
Trump, in his aluminum and steel proclamations in early February, pointed to the increase in imports and decrease in domestic production as threatening to impair US national security. He reinstated duties on global imports under Section 232 of the Trade Expansion Act of 1962. According to the White House, this statute provides the president with authority to adjust imports being brought into the United States in quantities or under circumstances that threaten national security.
“AMBA continues to strongly support President Trump’s efforts to level the playing field by applying tariffs on imported Chinese molds, tooling, and dies,” Conis said. “The new combined 35% tariff rate President Trump placed on imports helps to counter the undervaluation of these critical goods, which often enter the US from China at 40 to 60% below the cost of an American-manufactured mold.”
The 25% tariff on all steel and aluminum imports will eliminate prior country exemptions and tariff-rate quota agreements for several countries, including Canada, Mexico, the European Union, the United Kingdom, Japan, and South Korea.
According to the White House, Trump’s decision to close existing loopholes and exemptions “will strengthen United States’ steel and aluminum industries.”
Moreover, Conis maintains the tariffs ultimately could level the playing field for domestic mold builders.
“We encourage the president to continue working with US industry to address not only dumped and subsidized goods shipped directly from China but also the increased shipments from subsidized manufacturing operations in Southeast Asia, Mexico, and elsewhere,” Conis concluded.
Supply chain disruptions
The impact of the looming tariffs could extend beyond just leveling the playing field. There is concern throughout the plastics industry that tariffs will slow production timelines as suppliers work through supply chain disruptions. In response, some companies are considering alternative sourcing strategies, including seeking domestic suppliers or diversifying their imports. However, experts caution that the limited availability of high-quality domestic steel and aluminum could pose additional challenges, forcing many mold makers to absorb higher costs or risk losing business to overseas competitors.
Jason Miller, a supply chain professor at Michigan State University, noted on LinkedIn that exposed sectors include tool & die and industrial molds. He also outlined why tariffs will be inflationary for producers in these sectors, explaining that about 47% of US aluminum consumption is imported, mostly from Canada, meaning higher costs will be passed on, coupled with domestic producers raising prices. For steel, only 13% is imported, but Miller noted that domestic steel mills will likely move to raise prices, as happened in 2018.
Miller wrote on LinkedIn in February.
“Tariffs on aluminum and steel will be an inflationary cost shock for many manufacturing sectors that employ far more people than the steel mills and aluminum smelters themselves employ. Such tariffs make downstream sectors less competitive. Ultimately it will be detrimental to total US manufacturing output once they are implemented.”
For every action, there often is an equal and opposite reaction. If the price of aluminum becomes more expensive, Coca-Cola CEO James Quincey said during a corporate earnings call in February that the company could start producing more beverages in plastic bottles.
“As it relates to our strategies around ensuring affordability and ensuring consumer demand, if one package suffers some increase in input costs, we continue to have other packaging offerings that will allow us to compete in the affordability space.”
During the call, Quincey said the impact of tariffs likely would be minimal or plastic versus aluminum.
Tariffs’ impact on plastics industry
While the impact of tariffs on steel and aluminum is debated, wider-reaching tariffs that could have a deeper impact on the plastics industry have Plastics Industry Association (PLASTICS) President and CEO Matt Seaholm sounding a cautious tone.
“The plastics industry recognizes the importance of securing our borders and combating illegal drug trafficking to protect American communities,” he said.
According to PLASTICS, in 2023, US plastics exports totaled $74.2 billion, exceeding imports of $73.3 billion and resulting in a $958 million trade surplus. This strength underscores the industry’s global leadership. However, new tariffs on key trading partners threaten supply chains, increase costs, and risk eroding this advantage.
The group noted that to sustain growth and innovation, trade policies must bolster — not hinder — US plastics manufacturing and economic leadership. Moreover, Seaholm pointed out that a competitive industry requires policies that protect high-quality jobs and ensure stable supply chains across sectors like healthcare, consumer products, and automotive, all key end markets for plastics processors. Matt Seahom added . . .
“A strategic, measured approach to trade is critical to strengthening and not inadvertently harming the US industry. We look forward to working with policymakers on balanced trade policies that enhance US competitiveness, reinforce supply chains, and drive continued innovation.”
Trade organizations respond
Recycled Materials Association (ReMA) President Robin K. Wiener recently noted the organization has long supported free and fair-trade policies, including the United States-Mexico-Canada Agreement (USMCA) that entered into force in 2020. Wiener explained.
“While we understand the Trump Administration must focus on solutions to address major problems at the border, such as fentanyl trafficking, the imposition of tariffs on our North American trading partners will significantly disrupt US manufacturing and recycling operations that depend on recycled material inputs.”
According to Wiener, the US recycled materials industry is a net exporter and supports 500,000 jobs nationwide, with the exports of recyclables helping to reduce the US trade deficit. US recyclers benefit greatly from the North American market access that the USMCA provides, access that these tariffs will put at risk.
“Each year, more than $8 billion in recycled materials cross the US-Canada border, while nearly $3.3 billion of recycled products cross the US-Mexico border.”
These new tariffs, and any retaliatory measures they may provoke, according to Wiener, will only reduce the competitiveness of the industry and the manufacturers that rely on recycled materials. Wiener . . .
“We look forward to continuing to engage with the new administration and Congress to work toward a bright future for American recycled materials companies and the businesses they support.”
According to the American Chemistry Council (ACC), Canada and Mexico are its industry’s largest trading partners. Saying . . .
“The American chemical industry imports materials, many of which are unavailable in the United States, adding value and supporting other manufacturing supply chains domestically and abroad, through our exports,” Adding that US chemicals hold a net exporter position with Canada and Mexico.
“We would ask that all parties negotiate a solution to the issues behind these orders as soon as possible,” the ACC concluded. “In particular, the US chemical industry continues to support the USMCA Agreement between the United States, Canada and Mexico.”