A tariff intention from Mexico is sending ripples through the North American textile supply chain. According to industry public information, the Mexican government is evaluating a new round of trade restrictions targeting non-FTA countries, with textiles, apparel fabrics, and garments again at the core. This is the third signal after two rounds of tariff hikes in 2026, indicating that Chinese textile companies' Latin American business is shifting from cost competition to survival.
Background
Looking back at the two tariff rounds in 2026, textiles were always at the forefront. In January, Mexico converted temporary tariffs into permanent regulations, imposing 10%-50% tariffs on 1,463 HS codes. Textile rates rose to 25%-35%, and garments up to 45%, covering imports worth $52 billion. In April, Mexico added tariffs of 5%-35% on 185 more codes, including apparel, footwear, and textile accessories. After two rounds, the cost of Chinese textiles entering Mexico has significantly increased, and a third round would add further pressure.
Notably, the policy is differentiated: US, Canada, and EU FTA partners are exempt, targeting Asian supply chains. Mexico's Economy and Finance Ministries are still evaluating, but given the tightening trend, textile exporters must prepare in advance rather than wait passively.
Industry Impact
Under tariff pressure, Chinese textile exports to Mexico show cracks. China is Mexico's largest textile and apparel import source, with exports reaching billions of dollars in 2024, accounting for over 30% of Mexico's imports. Industry data show a noticeable decline in some categories after tariffs, with high-volume, low-margin basic products hit first. Domestic fabric and garment companies typically have profit margins of only 4%-8%; new tariffs would force them to either raise prices and lose customers or absorb losses. Intermediate products like yarn and greige fabric also suffer, as Mexican garment factories using Chinese fabrics may reduce procurement, shifting orders to lower-cost regions.
This is driven by external geopolitics and domestic protection. The US has long worried about Asian textiles "washing origins" through Mexico to enter North America duty-free under USMCA, pressuring Mexico to tighten import controls. With USMCA under annual review, Mexico aligns trade policies to gain leverage. Domestically, tariffs serve the "Plan Mexico" national revitalization, with industry associations calling for job protection. However, the policy has internal contradictions: Mexican garment factories rely heavily on Chinese fabrics and chemical fibers, and tariffs raise their production costs, weakening competitiveness—a factor that may moderate policy extremes.
Practical Recommendations
Facing rising trade barriers, textile companies need multi-dimensional strategies.
For Buyers - Review HS codes for export products, calculate cost impacts under different tariff scenarios, and include tariff-sharing clauses in new contracts to avoid losses from sudden policy changes. - Be cautious with long-term bulk orders, reserving price adjustment mechanisms to avoid locking in low margins.
For Trading Companies - Diversify markets: while maintaining Mexican clients, explore Southeast Asia, the Middle East, and Belt and Road countries to spread order risks. - Upgrade product mix: shift from low-price, high-volume to high-value-added fabrics and functional textiles, enhancing pricing power to offset tariffs. - Evaluate supply chain options: consider regional co-production or nearby facilities, but strictly comply with rules of origin and avoid gray-channel transshipment to maintain compliance.
The North American trade landscape is restructuring, and trade protectionism is becoming the new normal. Textile companies must monitor policy developments, prepare contingency plans, and rely on compliance and product upgrades to stabilize their business footing in a complex international environment.