Mexico’s recent move to impose immediate restrictions on textile imports under its IMMEX duty-deferral program, who some are referring to as “Mexico’s IMMEX apparel import ban”, could create significant challenges for U.S. apparel brands relying on Mexico as the path to import into the US. The decision is already causing a surge in activity for third-party logistics (3PL) providers striving to adapt to the changes.
- The decree prohibits certain temporary imports, primarily targeting apparel and textiles.
- These changes are effective as of December 20, 2024.
- Tariffs rates went up for finished textile goods, 20%-35%.
- Tariff rates went up for raw materials and components, 10%-15%.
- Who is the most affected? US ecommerce companies that rely on the IMMEX program.
What’s Changing?
Companies importing goods into Mexico are facing higher costs and potential supply chain disruptions due to new regulations. On December 19, 2024, Mexican President Claudia Sheinbaum issued a presidential decree increasing tariffs on many textile products.
- Tariffs on finished textile goods rose from 20% to 35%
- Tariffs on raw materials and components increased from 10% to 15%.
- Restrictions on temporary imports of textiles under the IMMEX Program took effect on December 20, 2024.
What is the IMMEX Program? Standing for Industry for Manufacturing, Maquiladora, and Export Services, the program allows foreign companies to import goods into Mexico duty-free for manufacturing or assembly before exporting them.
The Mexican government states that the new measures aim to protect the domestic textile industry, which has seen significant job losses—79,000 positions in recent years. Tariffs increased on 138 garment product categories and 17 textile categories, though countries with Free Trade Agreements with Mexico, such as those under the USMCA (United States-Mexico-Canada Agreement), will be exempt.
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Who Is Most Affected?
U.S. ecommerce companies that rely on the IMMEX program are among the most impacted by the new regulations. Many utilize Mexican warehouses to reduce labor costs and re-export goods to the U.S. duty-free, taking advantage of the de minimis exemption, known as Section 321, which allows shipments valued under $800 per day per customer to enter the U.S. without duties.
This new Mexico IMMEX apparel import ban will significantly disrupt fulfillment operations for apparel and textile brands that depend on IMMEX warehouses. To adapt, these businesses will need to consider alternative strategies, such as relocating operations back to the U.S. or exploring fulfillment options in other regions, including Canada. While Mexico’s lower labor costs have been a key advantage, the increased tariffs and added logistics complexities may outweigh these benefits.
If you’re looking for more details about Section 321, please be sure to check out The Complete Guide to Section 321 Fulfillment
Navigating IMMEX Regulation Changes: What Brands Can Do Next
The recent changes to Mexico’s IMMEX program have left many ecommerce brands scrambling to adapt. Increased tariffs and new restrictions on temporary imports are significantly impacting businesses that relied on Mexican warehouses for cost-effective fulfillment. Here’s a closer look at the available options and the implications of each.
Continue Fulfilling from Mexico
One option is for brands to maintain their operations in Mexico. While labor costs in Mexico remain lower than in the United States, the new tariffs—ranging from 35% on finished textiles to 15% on textile inputs—significantly diminish these savings. For many, the additional costs will outweigh the benefits of staying in Mexico.
Brands choosing to continue fulfilling from Mexican facilities must also contend with logistical challenges, such as cross-border transportation and customs clearance, which can be time-consuming and costly. Despite these hurdles, for businesses whose operations are deeply entrenched in Mexico, this may still be a viable, albeit less profitable, option.
Shift Fulfillment Back to the U.S.
Relocating fulfillment operations back to the United States is another route for brands to consider. This move eliminates reliance on cross-border logistics and the hassles of customs and tariffs associated with IMMEX. Additionally, U.S.-based fulfillment offers advantages such as shorter transit times and simplified operations.
However, the loss of duty savings previously achieved under Section 321—allowing duty-free entry for shipments under $800 per customer per day—means brands will face higher overall costs. While this option might not restore all the savings once achieved in Mexico, it does offer faster transit times and better control over fulfillment processes.
Relocate Fulfillment to Canada or Another Country
Brands seeking to maintain duty savings under Section 321 can explore relocating fulfillment operations to Canada or other countries. Unlike Mexico, Canada’s handling of Section 321 remains unchanged, allowing shipments under $800 per customer per day to enter the U.S. duty-free.
Canada presents an attractive option for businesses that want to minimize disruptions while maintaining cost advantages. It offers the ability to continue duty-free imports, potentially avoiding the financial strain caused by the new Mexican tariffs. However, companies must evaluate factors like setup costs, labor availability, and logistics networks in Canada to ensure this transition is financially and operationally feasible.
Read the Three Post-Election Ecommerce Predictions, a round-up of important changes in ecommerce going into 2025.
Bottom Line
The changes to Mexico’s textile tariffs and IMMEX program mark a significant shift for businesses relying on cost-effective cross-border operations. While these new regulations present immediate challenges, they also offer an opportunity for brands to reassess and strengthen their supply chain strategies.
Adapting to these changes requires careful consideration of costs, logistics, and operational efficiencies. Whether choosing to remain in Mexico with adjusted expectations, relocating to the U.S. for simplified processes, or exploring new opportunities in Canada or other regions to maintain duty-free benefits, businesses must act strategically to minimize disruptions.
Ultimately, this evolving landscape underscores the importance of agility and innovation in supply chain management. Brands that take proactive steps to optimize their operations will be better positioned to navigate these challenges and emerge stronger in the competitive ecommerce market.
If you are interested in working with an experienced 3PL, send us a note to connect about how we can help your company grow. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support
Tags: International
