Over the last several decades, many industries have pursued offshoring manufacturing trends to access more cost-effective opportunities for consumers. For many international brands, the U.S. represents a major consumer market, and delivering items at the right price point is a defining feature of a competitive business. By building tools and molds offshore, in markets like China, companies offset the high costs of developing tools in American manufacturing locations. Even though this required shipping and importing those tools into their target U.S. market, the cost savings of offshore manufacturing still offset any potential tariffs.
But this has changed. The current administration has proposed new tariffs that may turn the supply chain calculus on its head and change how overseas producers create goods for the American marketplace. Suppliers will need to confront these issues and develop a plan to navigate around the potential disruptions these new tariffs create. Options are available to build resiliency into your supply chain while enjoying reliable access to the U.S. marketplace. Reliant Plastics can help.
How New Tariffs Will Impact Overseas Manufacturers
Creating accurate, high-quality injection mold tooling is intricate and often the most expensive part of any manufacturing project. However, once you have reliable tooling, the long-term cost per part drops significantly. Due to the high tooling cost and the demands facing many manufacturers, China is a popular destination for mold development. There is considerable expertise and production capacity available to support that demand.
Tariffs on new tools and mold builds existed before these new tariffs were proposed, some at a rate of 30% of the mold’s total value. At the current 30% level, and even factoring in the cost of overseas freight, building new tools in China is about one-third the cost of building tooling inside the United States.
Even with newly proposed tariffs, building new tools and molds overseas may still be more effective than building them in the U.S. But tariffs on finished goods are likely to be much higher than tariffs on molds and tools alone, and overseas companies may struggle to balance out the cost of importing finished goods to the U.S. market as a result.
The tool’s destination becomes the real test for foreign-based businesses. If manufacturing continues overseas, those plastic products may face new tariffs when entering the US, which can affect demand and bottom-line profitability. By creating molds and tools overseas and then bringing them to the U.S. for production runs, international manufacturing brands can offset the impact of increased tariffs while still reaping the benefits of the lower cost of tool and mold creation in countries like China.
Reliant Plastics makes a perfect partner for international manufacturing companies looking to run production in the U.S. The tools and molds that our manufacturing customers produce overseas can be shipped to our facilities in Gainesville, Texas, and then used to run production for finished parts. Since these parts are created on U.S. ground, they can be labeled “Made in the USA.”
Avoiding New Tariffs With Domestic Manufacturing Processes
Forging a partnership with Reliant can allow international businesses to avoid new tariffs by depending on our domestic manufacturing support. We can produce parts to exact tolerances even at high volumes with our extensive array of molding machines across multiple tonnage levels. Moving your tooling or molds to Reliant’s U.S. base allows you to use our capacity to produce parts inside the United States and avoid import tariffs.
We have highly controlled facilities to maintain your tooling and keep it safe and effective during manufacturing runs. If transferring original tooling is not an option due to other constraints, your business could also invest in building a secondary tooling set exclusively for serving the U.S. marketplace. Every year, Reliant handles hundreds of tool transfers from our partners, giving us a broad understanding of the logistics and requirements necessary to execute such a project.
Reliant has a substantial capacity for spooling up new production and bringing in tools from around the world. With new tariffs on all imports into the United States on the horizon, domestic manufacturing capabilities may become a vital asset for reaching American consumers with cost-effective products.
Bring Manufacturing to the United States with Reliant Plastics
New tariffs may disrupt the sourcing of plastic injection molded parts, especially for companies outside the United States. There is also uncertainty surrounding how far the administration may go with the tariffs or how long they may be in place. However, with potential long-term effects, it’s wise for suppliers and manufacturers to explore new solutions sooner rather than later.
Our extensive experience with tool transfers and manufacturing makes onshoring production a cost-saving option for international brands. Manufacturing your parts within the United States can be an effective way to maintain marketplace access without undermining business viability due to the high costs of tariffs and duties. Our mold maintenance, storage skills, and extensive support for part runs on multiple plastic injection molding machines make us the ideal partner during this uncertain time.
Connect with us today to discover more about how we can support your business.