Mexico is preparing a third round of tariff increases, again targeting textiles, apparel fabrics, and garments. The previous two rounds covered over 1,600 tariff lines, with some garment duties reaching as high as 45%. For Chinese textile exporters, whose profit margins typically range from 4% to 8%, this poses a severe cost challenge.
Policy Trajectory: From Temporary Tariffs to Systematic Restrictions
In January 2026, Mexico converted temporary tariffs into permanent regulations, imposing duties of 10%-50% on 1,463 tariff lines. Textile rates rose to 25%-35%, with garments up to 45%, affecting imports worth approximately $52 billion. In April of the same year, an additional 185 tariff lines faced increases of 5%-35%, covering footwear and textile accessories.
Now, a third round is being considered, targeting non-FTA countries such as China, South Korea, India, and Vietnam, while exempting FTA partners like the US, Canada, and the EU. Mexico's economy and finance ministries are still in internal assessment, with no formal legislation yet, but the policy direction is clear.
From an industrial cluster perspective, this policy will hit export-oriented textile hubs in Zhejiang, Jiangsu, and Guangdong hardest. These regions rely heavily on high-volume, low-margin orders, making them especially vulnerable to tariff fluctuations.
Industrial Impact: Dual Pressures of Cost Pass-Through and Order Diversion
Mexico's tariff hikes stem from both external geopolitical pressure and domestic industrial protection. The US has long worried about Asian textiles transiting through Mexico to enter North American markets duty-free under USMCA, and has pressured Mexico to tighten import controls. Meanwhile, President Sheinbaum's "Plan Mexico" aims to foster import substitution and protect domestic textile employment.
However, the policy harbors internal contradictions. Mexican garment factories heavily depend on Chinese fabrics and synthetic accessories, as the local supply chain is incomplete. Higher tariffs on imported fabrics will inevitably raise production costs for Mexican garment makers, undermining their competitiveness. This self-defeating effect may moderate the policy's intensity.
For Chinese exporters, the immediate impact is further compression of profit margins. Intermediate products like yarn and greige fabrics are also vulnerable, as Mexican buyers may shift orders to Vietnam, Bangladesh, and other alternatives. Additionally, Mexico has intensified origin verification, increasing inspection rates and risks of port detention, raising logistics and financial costs.
It's worth noting that the third round is still under consultation; final rates and product lists may change. Companies that use this buffer period wisely can prepare and avoid reactive measures.