Decisions made in the development stage of a new products will affect the whole lifecycle of the product. Manufacturing costs, product performance, maintainability and customer satisfaction in the use phase are parameters the engineers need to consider. In a sustainability perspective can durability and a potential long lifetime with less breakdowns be regarded as positive. Additionally, in a circular economy perspective the potentials for easy disassembly, recyclability and remanufacturing or reuse at the end of life are important. The selection of precision levels and tolerance limits on geometry and material properties in the design phase of mechanical components are decisive for these aspects. While tolerance selections traditionally focused most on meeting customer requirements and interchangeability of parts for assembly, the product development engineers are now facing several “Design for X”—challenges where tolerance selections and distributions are one of the key issues. This paper describes a Closed Loop Tolerance Engineering (CLTE) model describing information flow for tolerance engineering throughout the product lifecycle. The model includes feed forward and feedback of data and information between functional requirements description, tolerance synthesis and analysis, manufacturing process capabilities, measured product performance and end-of-life considerations.