Canadian mould makers say quiet U.S. tariff tweak loudly impacts their bottom line

New U.S. tariffs are hitting Canada’s tool and mould makers hard, and they seemingly came out of nowhere.

Unlike many previous trade war tweaks under U.S. President Donald Trump, these most recent tax hikes came without the usual bluster. 

On April 2, the White House quietly announced changes to its tariffs around steel, aluminum and copper imports (Section 232 of the U.S. Trade Expansion Act). The tax levies apply to the full customs value of imports, regardless of the metal articles. The tariff used to only apply to the metal segment.

“Articles made entirely or almost entirely of aluminum, steel or copper will pay a flat 50 per cent on their full value — for example, steel coils and aluminum sheet,” is one of the tweaks the White House included in a bullet-point summary on its website, referring to such imports as a “national-security threat.”

Jonathon Azzopardi is the president and CEO of Laval Tool & Mould Ltd., in Maidstone, Ont., just outside of Windsor.

His company has been in the community for 49 years and employs more than 100 people.

“This was a direct attack at the supply chain in Canada,” he said.

Referring to it as “premeditated murder” to the industry, Azzopardi says the United States took the same approach with the automotive sector.

“We see how many plant closures … This cannot be taken lightly. There are ways to mitigate it. We know that other industries have been excluded from this tariff for the same reasons that apply to us, and action needs to be taken now.”

Azzopardi says China is the biggest threat to the North American mould maker industry — not Canada.

He estimates the hike in tariffs could hit his company’s bottom line by as much as $5 million worth of product in one year.

“We will have to start to look at what our options are … and if that means possible relocation or something to do in the United States, we may have to consider those at this time because this is the time of desperation.”

Nicole Vlanich is the executive director of the Canadian Association of Mold Makers (CAMM). 

The main hub of mould makers in Canada is in the Windsor, Ont., area because of its proximity to the border and U.S. clients.

Vlanich says they were completely taken off guard by the amendments — calling it a “drastic change,” that “came out of left field.” 

She says businesses have to pay tariffs on 100 per cent of their value, and for each time they cross the border.

“A mould that was paying $1,500 in tariffs a couple of weeks ago is now paying over $30,000 potentially in tariffs just due to this change — and that’s just one item,” she told CBC Radio’s Windsor Morning host Amy Dodge. 

“Moulds go back and forth. We are a very integrated system with the U.S., so they go back and forth. So this is significant.”

According to Vlanich, the industry gives quotes months in advance, with many businesses having products already on the floor, ready to ship, when news of the tariff spike came out.

“No one really knows the implications. They’re kind of taking it as it goes because … they can’t stop production. It would stop things on both sides of the border. We rely on each other. We are two different countries, but we really operate as as one region.”

Vlanich said if the tariffs remain for the long term, there’s a fear another country could come in and take business from Canadian mould makers. She’s hoping summer Canada-U.S.-Mexico Trade Agreement (CUSMA) trade talks can rewrite the changes.

“We have a lot of members that have 10 or less employees. Their profit margins are … five to 10 per cent. They don’t have this kind of money, and to keep them open and to keep them going … they’re going to need some financial relief at minimum.”

Political relief required?

A federal standing committee on industry and technology has agreed to further study the issue for three days later this month. Azzopardi will be attending and speaking in Ottawa.

Windsor—Tecumseh Conservative MP Kathy Borrelli tabled the motion for the study calling it an “emergency crisis.”

Essex Conservative MP Chris Lewis says it’s impacting food on the tables of all Canadian families.

“If there was ever a bipartisan special emergency study, this is the one, because it effects all of us,” he said.

Ryan Donally, president of the Windsor-Essex Chamber of Commerce, says the tariff alterations have been a “major shock” to many of their local businesses.

Windsor—Tecumseh Conservative MPP Andrew Dowie says it’s created serious uncertainty across the sector and says mould making is “foundational” to all of manufacturing.

“Every vehicle, appliance and medical device depends on precision tooling produced by Ontario companies operating in an integrated North American supply chain,” he said in the legislature this week.