Mexico President Claudia Sheinbaum has increased tariffs on textiles and apparel imports, and ended the practice of “border-skipping,” whereby many U.S. e-commerce sellers leverage nearshoring to avoid tariffs on Chinese goods. 

The tariff increases, signed into effect by a December 19 presidential decree, include applying additional 15% or 35% tariffs on certain apparel categories. Many apparel goods are also excluded from qualifying for the country’s IMMEX program, which allows for duty-free imports of intermediary goods. 

These are seen as a protective measure for the Mexican textile industry, and a way to reduce imports from China, potentially avoiding trade conflicts with the U.S.

Currently, a loophole in trade law allows importers to avoid tariffs using the Section 321 provision, by using Mexican warehouses as fulfillment hubs for low-cost finished products that are then sent directly to U.S. consumers.

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“The increased tariffs and cessation of duty-free imports puts apparel brands in a scramble to find alternative fulfillment solutions and consider shifting strategies from nearshoring via Mexico to reshoring their operations in the U.S.,” said Ryan Martin, president of distribution and fulfillment at ITS Logistics.