US Government: Supply Chains in Focus

By Omar S. Nashashibi, co-founder, The Franklin Partnership, LLC

The COVID-19 pandemic not only awakened OEMs but also senior government officials in Washington, D.C. to the need for a reliable domestic supply chain. Starting in April 2020, as a lobbyist for manufacturing associations, I began fielding questions about downstream industries as policymakers came to the realization that a robust and successful Tier I, II and III supply base are essential to national and economic security.

This is why the AMBA in April 2024 filed comments with the US Trade Representative (USTR) on promoting supply chain resilience. Government officials in Washington, D.C. have recognized the importance of a comprehensive supply chain strategy that does not only focus on the largest of corporations and single suppliers.

American mold builders and manufacturers of tools and dies are the backbone of manufacturing worldwide, without which few finished goods exist. As part of the USTR investigation, policymakers are asking for input to help strengthen the US manufacturing base and workforce and develop specific policy tools to achieve those goals.

In comments to the USTR, AMBA called on the Biden administration to adopt comprehensive trade policies that build from the ground up, supporting downstream industries. As the Biden administration looks to develop sector-specific remedies to support key industries, the AMBA is standing up for its members and for manufacturing in America.

AMBA is calling on the Biden administration to not only develop trade policies for today but to address the continued and oncoming onslaught of imports competing with US manufacturing. As AMBA and others succeeded in maintaining the 25% tariffs on imported molds and tooling from China, manufacturers and their supporters in the Chinese Communist Party continue to seek avenues to evade tariffs and duties.

In comments filed, the AMBA called upon the Biden administration to focus on the transshipment of goods from China through third-party countries. A tactic often employed by importers is shipping goods from China, through Asia, Europe and even Mexico, in an attempt to mask its country of origin.

This form of transshipment allows importers to bring cheap goods into the US made in China but bearing the label of another country. The Biden administration in April 2024 began allowing companies to file trade cases against businesses receiving Chinese government subsidies even if they are operating in another country.

As AMBA-supported tariffs raised the price of Chinese imports, overseas companies worked to obscure the true source of their material and finished products. The AMBA, in its comments to USTR, reinforced the need to focus on the true origin of the manufactured product and the financial support often received from a foreign government. These illegal subsidies force AMBA members to compete against foreign governments – placing American workers and manufacturers at a significant disadvantage.

In the comments AMBA filed, the association made clear that member companies have the open capacity and capability to fill orders for a range of industries from defense to medical, infrastructure and automotive. As reported by members, the inability to provide a product is not a reason for customers to shop overseas and source from China, price remains the primary factor.

The “landed price” from China remains 30-50% below quotes from American mold manufacturers, even accounting for the existing 25% tariff levied under the Section 301 action on Chinese imports. This is why AMBA is calling on the Biden administration to not only retain the 25% tariffs on imported molds, tooling and dies from China but double the rate to at least 50%.

AMBA also recommended that the USTR focus on tracking a surge in imports of molds, tooling and dies as a result of increased tariffs on raw materials used to manufacture those products. The shifting of injury from one level of the supply chain up to another often is the product of customers importing a more finished product into the US to avoid paying a higher price for American goods subject to higher input costs.

A system to monitor a surge in downstream product imports will assist policymakers in identifying in real time the increased shipments entering the US. It also will allow better insight into strategies used by overseas competitors to evade tariffs on those raw materials.

The USTR supply chain review is an important factor as the Biden administration concludes its long-awaited review of the Section 301 tariffs on Chinese imports. Required by law after four years, and now in its second year of review, the USTR’s conclusions also could lead to increased tariffs on imports from China.

The Section 301 tariff action imposed by former President Trump covered roughly 60% of Chinese imports, including molds, tooling and dies. The Biden administration could use the information AMBA and other groups provide to address many of the ongoing challenges as China increasingly looks outward to stimulate its economy.

Evasion of tariffs and duties is not the only barrier from trade facing American mold manufacturers. Imports from Canada remain a concern, both for reasons related to transshipment but also to lower energy costs than those faced by US competitors.

Sources in Washington indicate that the USTR hopes to release a report on supply chains this fall ahead of the November elections. The results will clearly lead to discussions over the supply chain within the context of the 2024 election. However, the comments filed by AMBA, the leg work put in by the association and the mobilization of its members since 2019, will help instruct either administration on the steps it needs to take to use trade laws in a way that will strengthen downstream manufacturers.

AMBA members have had the opportunity to build upon advances in Washington over the past few years, and this is why the association is making its voice heard. Whether on tariffs, overseas subsidies or global supply chains, the US Government is focused on the downstream manufacturer and wants to hear from AMBA directly. Keeping the pressure beyond the election is how US mold manufacturers and the AMBA will continue to make a difference. n

Omar Nashashibi is a founding partner at The Franklin Partnership, LLC, a bipartisan government relations and lobbying firm retained by the American Mold Builders Association in Washington, D.C.