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Navigating Trump's New Tariff

By Phil Guajardo on Oct 3, 2018 4:13:21 PM

Earlier this year, President Trump implemented a 35% tariff on plastic injection molds

from overseas, with China being the biggest player. If you are a company that regularly utilizes plastic injection molds from China, then this issue directly impacts your bottom line. Today, we want to share some strategies we implement here at Pleasant Precision Inc. that may help you and your team navigate the costs of this new tariff.

Quote Breakdown

Breaking down the quote into multiple sections has proved to be a quick solution to slow down the bleeding of rising costs. By breaking down the quote into multiple sections, we increase our chances of paying the tariff on the mold build and avoiding it on other pieces. When we say "split the quote" what we are talking about is the breakdown between the mold build and the engineering. Currently your quoted price is all inclusive and therefore you are paying tariffs on more than you should be. If you are able to get a quote for the engineering & shipping separate from the quote for just the mold build, you allow yourself to only be tariffed on the mold build, and therefore turn around a better margin. The split between engineering/shipping and mold build is usually 60/40 to 70/30. This, however, is a short-term fix, as the government will likely add revisions to combat this route.


Fostering Domestic Partnerships

Befriending other toolmakers is highly beneficial, for they may have strengths where you fall short, and weaknesses in which you succeed. It is likely that the US tool making market will grow, and maintaining a reliable partnership is a vital aspect of any growing company. Unlike the quote breakdown, this is a long-term strategy that will help you prepare for the influx of demand.

Modular Molding Systems

The ability to reuse a base for multiple injection molding projects makes you a highly competitive and more profitable company. When building tools, since the base already exists, you are cut down on machine run time exponentially by eliminating the base plate work. This allows toolmakers to focus solely on the detail portion of the tool and reduces setup time during production.  This also allows for shorter lead times. Modular molding also helps save you money in the manufacturing aspect of your product as well. Modular molds reduce mold set up time, which in turn, leads to lower piece prices. Different modular molding systems such as MUD, Side Load (uses a MUD base), Systems II, and Round Mate are all equally valuable to your bottom line. Every modular molding system has its advantages and disadvantages so it is imperative that you choose the right one to fit your product. When trying to combat rising tariff costs, this strategy is the best way to be self-sufficient long term, while also being able to offer customers a low tool cost.

Keep in mind that this tariff is new and ever-changing. Therefore, it is important to stay informed of new developments on the issue. If you would like to learn more about any of the strategies mentioned here, please contact us at 419-675-0556

NOTE:  Unexpectedly in December, the Trump Administration lifted this 25% tariff for at least one year - a decision many say is likely to hurt American mold makers but help U.S. plastics companies that supply automakers. Check out our [ updated blog HERE for further insight on the tariff suspension, what it means for mold makers, and what it ultimately means for you. 

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Topics: injection molding, lean manufacturing, advanced manufacturing, round mate, tariffs

Author: Phil Guajardo

Copyright Pleasant Precision, Inc.