News / US brands 'scramble' for fulfilment as Mexico imposes new tariffs

© Luboslav Ivanko

US apparel importers are “scrambling” to find new fulfilment centres after the Mexican government unexpectedly imposed new restrictions and tariffs.

A presidential decree introduced increases to tariffs on a range of finished textile goods, to 35% from 20%-25%, and from 10% to 15% on textile parts, and from 20 December brought in restrictions on the temporary import of textiles under the IMMEX (Manufacturing, Maquiladora and Export Services Industry) programme. 

IMMEX allowed foreign companies to import goods into Mexico for manufacturing or assembly duty-free, before re-exporting, often to the US, where the programme is also used for ecommerce fulfilment from Mexican warehouses. 

“At least 30 of the top 100 American brands on Shopify now fulfil from just across the Mexican border, mostly in Tijuana, to avoid US customs duties,” Flexport CEO Ryan Petersen noted on social media. 

“This ban will cause significant disruptions for brands that have relied on Mexican warehouses to fulfil apparel and textile orders for US customers, and will force these businesses to find new fulfilment solutions,” said Flexport in a blog. 

Mr Petersen told Bloomberg: “The president of Mexico actually imposed large tariffs against imports from China. And, to everyone’s surprise, those actually affected Mexican fulfilment centres, so these are ecommerce warehouses not shipping into Mexico, but importing into Mexico in order to re-export those goods to consumers in the US.  

“That’s a huge way US ecommerce is done – out of fulfilment centres in Mexico.” 

Mr Petersen claimed that one of the largest companies, XB Fulfillment, has had to email all its customers and cancel their contracts. The Loadstar approached XB for confirmation, but it has made no public statement. 

“A lot of American businesses are scrambling today to find new fulfilment opportunities, new ways to serve their customers in the US, even though it had nothing to do with the US government,” added Mr Petersen. 

Mexico is trying to level the playing field – unemployment in its textile industry has reached a high, with mass job losses. 

According to Flexport, the new tariffs will apply to 138 lines of garment products, as well as 17 lines of textile products. While the change won’t apply to countries with which Mexico has a free-trade agreement, such as the US, it will apply to other countries which import into the US via Mexico.