Published 06/04/2025

Resilient by Design: Moldmakers Respond to Tariff Tensions With Strength and Strategy

Amid tariff uncertainties, moldmakers must stay flexible, control what they can, plan for multiple scenarios and maintain team alignment.

Perc Pineda, Ph.D., Chief Economist, Plastics Industry Association

The Macroeconomy Reacts to Tariffs

The U.S. economy slowed in the first quarter. According to the Bureau of Economic Analysis’ advance estimate, real GDP growth declined by 0.3% on an annualized basis. Imports — which subtract from GDP — increased sharply by 50.9%, as businesses front-loaded purchases from foreign suppliers in anticipation of potential tariff hikes. Imports of molds for plastics, in particular, decreased in dollar value by 0.1% in February from a year earlier. On a year-to-date basis, imports decreased by 5.9%, which is inconsistent with the overall increase in imports of the economy. Government spending also declined by 1.4% — the first decrease since Q2 2022. At the federal level, spending fell by 5.1%, with defense and nondefense outlays dropping by 8.0% and 1.0%, respectively.

Alongside the opportunity to revisit pricing strategies, businesses should also prioritize innovation. Innovative products that deliver clear value to customers often benefit from more inelastic demand — meaning customer demand remains relatively stable even as prices change.

A portion of the first-quarter GDP downtick was due to a spike in imports, highlighting underutilized capacity in domestic manufacturing. At the end of the quarter, the U.S. manufacturing capacity utilization rate was 77.2%, while plastics and rubber products manufacturing operated at 71.0%. These figures reflect the ongoing weakness in manufacturing activity, which could benefit from stronger domestic demand. Not knowing whether imports went into consumption — unlikely, given the weaker change in personal consumption expenditures (PCE) — imports will likely be reflected in the change in inventory. An increase in inventory typically increases GDP in the short term. If the rush to import goods — perhaps in anticipation of escalating tariff tensions — is driven by expected future demand, then it is a strong positive signal for the economy. However, if inventories rise because of weak sales, it signals slowing demand.

Tariffs Pressure US Mold Trade Dynamics

The shifts in U.S. tariffs and trade policy have been chaotic and continue to evolve, creating persistent uncertainty. By the time this article is published, further changes in tariffs would not be surprising. U.S. moldmakers are likely aware of recent developments, including the baseline 10% tariffs effective April 5, 2025, and reciprocal tariffs ranging from 11% to 50% on products from over a dozen countries — initially set for April 9 but delayed 90 days to July 9, 2025. Notably, while Mexico and Canada are the U.S.’ largest plastics export markets and key suppliers, products that do not qualify for USMCA duty-free treatment are subject to a 25% tariff. Meanwhile, the original 20% tariff on Chinese products has surged to 145%. Tariffs and trade policy remain in flux.

One way of measuring the exposure of U.S.-made molds for the plastics industry is by looking at trade flows as a percentage of domestic shipments. Also, the exposures, be it from imports and exports, may differ. In the U.S., mold exports were 14.7% of domestic shipments in 2023 as shown in Chart 1. Mold imports were 55.2% of domestic shipments in the same year. Over the three-year period ending in 2023, trade flows of molds have declined, which could be explained by either increasing domestic demand or weaker global demand of U.S. molds. Additionally, the decrease in the share of imports to domestic shipments suggests reduced import dependency, or possibly trade friction or protection from foreign competition.

U.S. Molds: Trade flows as a percentage of domestic shipments. Source: 2024 Global Trends Report, Plastics Industry Association

At the time of writing this article, the 25% tariffs on molds from China — originally imposed under Section 301 during the first Trump administration and maintained by the Biden administration — remain in effect. In addition, a 140% tariff rate on goods from China further raises the cost of imported molds. These elevated tariffs serve as a form of protection for U.S. moldmakers by reducing price competition from low-cost imports, creating an opportunity to regain market share and strengthen domestic production capacity. However, the durability of this protection will depend on trade negotiations and long-term policy direction.

U.S. trade deficit in molds ($ millions). Source: PLASTICS analysis of United States International Trade Commission (US ITC) data.

While the three-year data suggest lessening dependence on imports, the U.S. trade deficit in molds for plastics has been a long-term phenomenon, as shown in Chart 2. It has grown from $605.2 million in 1997 to $1.5 billion in 2023. The U.S. had the largest trade deficit in 2018 at $1.7 billion. The U.S. had the largest trade deficit in molds with Canada in 2023, totaling $984.7 million and $323.6 million with China. The trade deficit with both countries increased last year, based on preliminary trade data. As shown in Chart 3, the U.S. continued to have the largest trade deficit in molds with Canada followed by China in 2024.

Top five countries with the largest trade deficit in molds. Source: PLASTICS analysis of U.S. ITC data.

Navigating Trade Tensions: What Businesses Can Control

Shifts in U.S. tariffs and trade policy, specifically 25% tariffs on steel and steel derivative products, do not cover imports of molds for plastics. Additionally, products covered by the USMCA agreement are exempt from the baseline 10% tariffs and reciprocal tariffs. So, molds for plastics from Canada will continue to enter the U.S. market duty-free.

As of February, mold imports from Canada totaled $145.3 million and imports from China was $60.1 million. With the 25% tariffs on molds from China under Section 301, imports from China have not decreased. While there are economic theories to explain why this might be the case, such as currency appreciation of the country imposing the tariffs, the full effect will be measurable in a meaningful way in due course. In the meantime, what can U.S. moldmakers do to help steer global trade toward a more favorable position? Negotiate, reevaluate and innovate.

More than 70 countries have reportedly contacted the U.S. government in response to the tariffs imposed by the Trump administration. As these nations negotiate with the U.S., businesses should also engage with their suppliers and vendors. Clear communication across supply chains is essential, especially in times of market uncertainty.

Raising tariffs as a means to reduce the trade deficit will yield limited results — if any — without addressing the policies and regulations that have long undermined U.S. manufacturing competitiveness. The Mercatus Center at George Mason University cited over 217,000 regulations affecting the manufacturing sector. Excessive regulation hampers global competitiveness. Current trade tensions are prompting businesses to reevaluate their pricing strategies in response to the rising risks of profit margin compression. Not all businesses rely on cost-plus pricing; when production costs rise, value-based pricing may be more suitable. Given the broad and visible effects of higher tariffs, especially when consumers are aware of them, the intended market pushback may be less than expected.

Alongside the opportunity to revisit pricing strategies, businesses should also prioritize innovation. Innovative products which deliver clear value to customers often benefit from more inelastic demand — meaning customer demand remains relatively stable even as prices change. This gives companies greater pricing power and resilience against rising production costs or shifting market conditions. While product innovation can be a long-term investment, it is a critical differentiator which strengthens brand loyalty, reduces price sensitivity and positions businesses for sustainable growth in a competitive global market.

Considering the lack of clarity on tariffs and trade, which could continue beyond the 90-day pause period on the Reciprocal Tariffs, moldmakers can deal with the uncertainty by focusing on what they can control, staying flexible and adaptable, using data as a guide but not as a crutch, planning for multiple scenarios and, more importantly, keeping the big picture in mind.

At the end of the day, the goal of a business is to maximize profit when the economy is expanding and to minimize loss when the economy is contracting. However, dealing with uncertainty requires a top-to-bottom approach. Asking the question — how are you ensuring your team understands and stays aligned amid current uncertainties? The answer could set the tone on how you and your team should deal with the uncertainty from tariffs and trade.