The always excellent Hackaday pointed out that tariffs may be put on 3D printing filament. They looked at the Tariff List of the Second Tranche of Tariffs that will be implemented by the US August 23rd and concluded that filament coming from China would be subject to a 25% tariff. The tariff schedule states that “Monafilament nesoi, of plastics, excluding ethylene, vinyl chloride and acrylic polymers” where nesoi means Not Elsewhere Specified or Indicated. Furthermore, tariffs on ABS and other plastic resins could make the raw material that goes into filament more expensive in some cases. “Acrylonitrile-butadiene-styrene (ABS) copolymers, in primary forms” is another line item as is “Polyamide-6, -11, -12, -6,6, -6,9, -6,10 or -6,12 in primary form.” The new US tariffs will indeed have repercussions on many businesses but will there be effects for 3D printing? I think that the effects on the industry as a whole will be minimal but this could hurt Chinese vendors of filament.
Why do I believe that this will not have broad effects?
Most 3D printed things are small, so will be the effects. In most applications, a 25% increase in price is totally fine. One Kilo of 3D printing filament actually makes a lot of stuff. Remember infill is about 20% to 30% so a Kilo buys me 1000 hearing aid shells that will see their material cost per shell increased from to $0.049 if we’re paying $40 a kilo of filament. Now meanwhile, if we were selling 3D printed mugs then our mug would go from $8 to $10. This increase would be significant but most of the things we make and sell are small indeed. Or the cost will be spread out over a week or few weeks so will not be felt.
Few people buying filament care about price. Most people don’t give a damn about price in a filament. Companies, enterprise customers and people at home all want their prints to work. In prototyping, iterations, day to day use and most manufacturing price of the material is secondary to the success of the print. The object has to be made to spec on the day, this is the important element of the equation. A price increase will not affect these customers.
The Spread is already way bigger than this increase. You can obtain in bulk filament from China at $11 per kilo. Yet, the average retail price is closer to $35 a kilo. Why such a big difference? Users like assuredness, the stuff that works, bet on the stuff you know. This means that they’re likely to stick with brands that do get more expensive if they trust them but if they don’t they’ll be looking to spend their way out of this problem.
Filament cost is but a small cost component compared to labor. Depending on how you calculate it and the geometry of your part, a shipped in a box part has perhaps 30% or more of its value comprised of labor. There’s little automation in post processing and getting things packed so this adds considerably to the cost equation. Typically labor is a much higher value problem than the material in 3D printed parts.
Collective Shrug. What would also not be bad for Chinese filament is to collectively shrug and bear this tariff. Then raise prices with 25% and later forget to lower them. This would be a boon if the tariff was shortlived.
If companies have volume and expertise they can easily set up shop elsewhere. Making filament is a question of expertise, knowledge, process, and procedure at the filament maker. The equipment has to be top notch as well but this equipment and the people manning it are relatively portable. Compared to other industries (eg making the resin) it would be relatively facile for a Chinese firm to set up shop in another country to make filament there.
For 25% those who do can switch to US or European filament. The price differences between bulk, economy, everyday filaments is not a huge spread. While there is a huge price difference in the cheapest everyday materials at $11 to the most premium prototyping materials at $60 a Kilo there is little spread between bulk PLA from many vendors whether they are in China or elsewhere. For a 25% increase, a lot of European and American companies can become price competitive to Chinese filaments. In this area, switching between vendors this tariff will make a difference.
This tariff is likely to affect only some players disproportionately. If your only play is low cost and you also have a relatively low-quality product then this tariff will disproportionately have negative effects on you. This should not be a headshot to your business but it could be if you had a weak business to begin with.
My take is therefore that it will not have an effect on average usage rates, will not effect print volume and will have no effects on the market for 3D printing filament but may have some isolated effects on some market entrants, namely low-cost filament producers that add little value beyond that. It will be difficult to predict what this will do for players such as Polymaker and Esun but it will, on the whole, be a negative for them that should let them lose customers proportionately to their quality.
3DPrint.com reached out to the industry to see what these tariffs meant for them. Sadly we haven’t heard back from any Chinese filament vendors but they were all likely asleep when the questions went out. We’ll update this article should we get responses from them.
The speculation of tariffs has affected our business already. We’ve had whitelabel and OEM customers (for whom we manufacture and package under their own brand) reach out to us looking to have their filament manufactured in the US instead of importing from China. It’s certainly not the only reason they reach out. They are looking for more value for their money by purchasing higher quality materials, as well as the flexibility of purchasing in pallet-size quantities instead of container-size quantities. We’ve already invested in expanding our production capacity to accommodate the increased demand. The increased production capacity has also provided better economies of scale which has allowed us to become more competitive.”
John believes as I do that, “I don’t think they will buy less. They will likely switch where they purchase their filament from. We certainly believe that people will buy more American and European filament. We’re already seeing it happen simply from the threat of tariffs. Now that tariffs are going to be implemented we expect to see that switch happen more rapidly.”
“all our items right from the USA using US based materials – we are even setting up a injection molding plant here in Springfield, MO USA that will allow us to make all our own spools in house; from recycled and scrap ABS that would otherwise be landfilled – we use over 200,000 spools each year and with most of those being imported from China the ability to make them in house and on demand will not only help to speed delivery times to our clients but also keep our price low since MakerGeeks can take raw plastic in one side and from the spools to the filament turn out a finished product. Right now MakerGeeks is making and selling about 500,000lbs of filament each year and with growth nearly doubling year over year we think that these tariffs will only increase the demand for solid, high quality and low priced USA 3D filament.“
Meanwhile in the Netherlands Sander Strijbos of Netherlands based filament manufacturing giant ColorFabb is not sure yet if and how this tariff will affect their business.
“Although the tariffs affect Chinese businesses directly and not European ones international trade is a complex web and it is hard to predict the outcome. China is of course a huge supplier of filaments for worldwide trade and if customers tend to shift to European brands, say colorFabb, this will of course increase our business. However, in the end, we think all tariffs are bad for business and often a political move for some short-term benefits. The current US government can easily apply these tariffs to Europe as well given the unpredictability and current trade tensions worldwide.”
Sander also does not think that there will be less demand or usage.
“No. There are a lot of alternatives in the market. There may be a shift from one brand to the other, but with the increase of the number of printers in the market and ever more printers being used to make a living (in production of larger companies, designer, prototypers, etc.) filaments will be sold. The only question is: who will be the supplier? It is of course the aim of the US government to purchase domestically made products. It is also possible Chinese manufacturers will absorb some or all of the costs in the hope it is a short-term trade war and to ensure they maintain their market presence. There will be a number of people who will shift from Chinese brands to other brands, which will be predominantly American and European, but how many is nearly impossible to predict.”
Kevin Pope of the large US based 3D printer and filament retailer MatterHackers sells Chinese, US and European filaments he tells 3DPrint.com that,
“Demand for filament definitely has some elasticity based on price – sales of our MH Build Series filament tripled when were able to cut costs and bring the price down (to $18.20/kg for ABS and $19.36 for PLA). The question is whether retail prices will actually go up to cover the additional costs. At the moment we have no plans on raising prices on China-sourced materials, we’ll simply be working with our suppliers, looking for additional efficiencies, and, quite frankly, hoping the tariffs don’t represent a new long-term reality.
As far as customer switching from China-made filaments to other sources – many high volume buyers already gravitate towards more premium European or U.S. brands like Colorfabb or our USA-made PRO Series. Those customers value consistency of quality, coloration and material properties over extremely low prices. For customers that are more price-value driven, even with the tariffs, China will still likely be the cheapest place to have filament manufactured.”
The well and balanced response from European and American manufacturers of filament does indicate that they are sanguine about their prospects with these tariffs. No one is saying that this will be the death knell for the Chinese filament makers, however. For some this tariff, if it subsists could mean adverse business conditions but on the whole, the effects for the entire industry will probably be limited.