Mexico is preparing a third round of tariff increases, again placing textiles and apparel at the forefront. According to sources, the Mexican government plans to raise tariffs on imports from countries without free trade agreements, with textiles, fabrics, and garments as key targets. If implemented, this will further escalate cost pressures for Chinese textile exporters, adding to the impact of two previous tariff rounds that have not yet been fully absorbed.
Escalating Tariff Layers
Mexico's trade protection is not a temporary move. In January 2026, temporary tariffs were made permanent, covering 1,463 tariff lines with rates from 10% to 50%. Textile rates rose to 25%-35%, and garments up to 45%, affecting imports worth approximately $52 billion. In April of the same year, an additional 185 tariff lines received extra duties of 5%-35%, including apparel, footwear, and textile accessories. After two rounds, the cost of Chinese textiles entering Mexico has risen significantly. A third round now looms, meaning exporters may face even tougher conditions.
Data shows China is Mexico's largest textile and apparel supplier, with exports reaching billions of dollars in 2024, accounting for over 30% of Mexico's imports in this category. Many small and medium exporters rely on high-volume, low-margin orders. Industry data indicates that after tariffs, some categories have already seen notable declines, with basic products suffering first.
Dual Drivers: External and Internal
Mexico's escalating import barriers result from both external pressure and domestic protection. Externally, the U.S. has long worried about Asian textiles transshipping through Mexico to enter North America duty-free under USMCA, thus pressing Mexico to tighten controls. With USMCA's annual review cycle underway, Mexico aims to align trade policies with U.S. demands to improve its negotiating position.
Internally, tariffs serve the "Plan Mexico" national revitalization program. The domestic textile industry seeks to fend off low-priced imports and protect jobs, with associations repeatedly urging stricter limits. The government wants to reduce imports, encourage domestic investment, and foster import substitution. However, a contradiction exists: local garment factories heavily rely on Chinese fabrics and chemical fiber accessories, and an incomplete supply chain means higher import costs could undermine their competitiveness, limiting how aggressive policies can become.
Practical Dilemmas for Companies
If new tariffs materialize, exporters will face multiple challenges. Profit compression is primary—many fabric and basic garment makers operate on margins of only 4%-8%. New duties force them either to raise prices and lose customers or absorb losses. Intermediate goods like yarn and greige fabrics are equally affected; Mexican garment factories sourcing Chinese fabrics will reduce purchases, shifting orders elsewhere.
Customs enforcement is tightening. Beyond tariffs, Mexico has intensified origin verification, cracking down on false declarations, raising inspection rates, and increasing risks of detention and delays, which boosts logistics and financing costs. Past transshipment and gray-channel routes are being blocked, leaving less room for shortcuts. However, the proposal is still under consultation, and final rates and lists may change, offering a window for preparation.
Practical Recommendations
For Buyers - Itemize product tariff codes, calculate cost impacts under various scenarios, and include tariff-sharing clauses in new contracts. - Be cautious with long-term bulk orders; build in price adjustment mechanisms to mitigate policy shifts.
For Trading Companies - Diversify markets by actively exploring Southeast Asia, the Middle East, and Belt and Road countries to reduce reliance on Latin America. - Upgrade product mix from low-price volume to high-value, functional textiles to enhance pricing power and tariff resilience. - Carefully evaluate supply chain options, such as regional co-production, but strictly comply with rules of origin and avoid gray channels.
The North American trade landscape is being reshaped, and normalized trade protection is a reality exporters must face. Textile companies should monitor policy developments, prepare contingency plans, and rely on compliance and product upgrades to stabilize their operations in a complex environment.