I am a sole proprietor in the U.S. I have a part that I am trying to get manufactured. I contacted several U.S. companies and found that the tooling cost for my part would be way out of my budget. So I contacted a Chinese manufacturing company and the prices they quoted were 1/4 of the best offer I have received from a U.S. company. At the U.S. prices it was going to take me 4 years just to recover the cost of the tooling.
I know nothing about the business of foreign manufacturing and am trying to understand the risks of trying this. Here, then, are my questions:
1) I will have to pay $4000 in tooling costs for my part. I pay the Chinese company and they make and use the mold needed to make my part. This means that the mold never leaves China. Do I have to pay any tariffs on this mold that I am buying but not importing? (I think the answer to this is "no", but I want to be sure)
2) I read the posting about who pays for import tariffs (Who pays import tariffs). My problem is that I cannot figure out what the total tariff is for my part. Let's assume that it is just a plastic widget (HTS 3923.90.0080; not a semiconductor package; no medical value). To make the math easy, let's assume that I want to import $500, $750, or $1000 worth of widgets. Today, 2/6/2026, what would the total tariff be? "10% baseline tariff?" or "47.5% tariff on Chinese exports?" or "China includes a 3% General Rate of Duty plus an additional 25% Section 301 punitive tariff" (from AI for whatever that is worth).
3) I don't know what I don't know. I have this quote. It gives the price for the tooling and the price per part. There is going to be the cost of shipping the parts to the U.S, and there is going to be some kind of import tariff (see #2). Before I invest $5000 (tooling plus order for parts), I'm trying to figure out if there are other hidden costs in this transaction that would impact the price. For example, a careful reading of the contract says that if I don't order more plastic widgets within 18 months, then they will start to charge me storage fees on the mold. Anybody want to share any other costs I should be looking out for?
Thanks.
P.S. I'm also nervous about investing $5000 for parts when I have not seen any prototypes with this manufacturing process. I have 3D prints of my part, so I know my design is good. What I don't know is how the quality of the injection molded part will differ from the 3D print. I don't know how to figure this out without buying a mold…
Are tariffs applied to purchases made in a foreign country that stay in that country?
byu/cdsdonham inAskEconomics
Posted by cdsdonham
3 Comments
1. If I’m understanding correctly, you’re paying $4,000 to the Chinese company to make a reusable mold that will then be used to produce the part in China, right? If so, you will not pay US tariffs on the $4,000, since that mold is not imported into the US. I do not know if or how China might tax that $4,000.
2. You would pay 48% on the total customs value of whatever you imported from China with that HTS code: [https://tariffs.flexport.com/?htsCode=3923.90.0080&name=having-a-telescopic-shaft&entryDate=2025-11-16&country=CN&value=10000&advanced=true&modeOfTransport=OCEAN&FIELD_DATE_OF_LOADING=%222025-11-16T00%3A00%3A00.000Z%22&FIELD_CHOSEN_HTS_CODES=%7B%2299030121%22%3Afalse%2C%2299030130%22%3Afalse%2C%2299030134%22%3Afalse%7D&FIELD_CHOSEN_SPIS=%7B%7D](https://tariffs.flexport.com/?htsCode=3923.90.0080&name=having-a-telescopic-shaft&entryDate=2025-11-16&country=CN&value=10000&advanced=true&modeOfTransport=OCEAN&FIELD_DATE_OF_LOADING=%222025-11-16T00%3A00%3A00.000Z%22&FIELD_CHOSEN_HTS_CODES=%7B%2299030121%22%3Afalse%2C%2299030130%22%3Afalse%2C%2299030134%22%3Afalse%7D&FIELD_CHOSEN_SPIS=%7B%7D)
3. Shipping costs, which are strongly influenced by energy costs, are a big risk. What does the contract say about currency risk; is the contract in terms of USD or CNY?
First of all, you may also want to check European manufacturers. Often they can make things a bit higher in quality and not substantially more expensive to the Chinese. Secondly, you’ll want to buy from the Chinese manufacturer DDP inco terms. Meaning they cover the entire process of tariffs etc. if they don’t cover that maybe check another supplier. If you are inexperienced with importing, it’s unwise to handle this all yourself. If you absolutely must, then hire a customs broker. They are not expensive but absolutely necessary legally for the process.
Also, you’ll can expect to pay tariffs on the invoiced value of whatever you are buying (whatever that invoice entails) on FOB terms. Meaning you do not pay tariffs on the shipping cost from the Chinese factory to the US.
For details, hire a customs broker and trust what they say. Better yet, just buy DDP from the seller and let the seller worry about the tariffs. They will just build them onto the price you pay but it eliminates huge risk on your part because you will not be liable for any increases in the tariff rate in between now and when you receive the item.
I think we have had some good replies here. However, we should be careful.
Yes, you don’t pay a tariff on a good that does not leave China, so you will not pay a tariff on the mold.
For the other tariff questions I think it would be best to contact a customs broker. Someone with experience of your particular industry could tell you more about hidden costs that we can.
Regarding your “PS”. I have done this sort of thing long ago (like 20 years ago). You can ask one of these companies to give you samples of another part that they make for a different customer in a different market. Notice that there can be several levels of tool if it’s plastic moulding. There are cheaper ones and more expensive ones. The more expensive ones last for more cycles of use. The highest quality molds are made using spark erosion of very hard tool steel, but you may not need one that good. This is the sort of thing to talk to a Mechanical Engineer about.