The US textile industry is raising concerns as the temporary suspension of tariffs on imports from Mexico and Canada, announced on 3 February, approaches its end. If the US reinstates these tariffs, Mexico and Canada have warned they are ready to impose counter-tariffs in response.
In a joint statement, the National Council of Textile Organizations (NCTO), the National Chamber of the Textile Industry (CANAINTEX), and the Canadian Textile Industry Association (CTIA) urged swift action to strike a deal. They also called for an immediate resolution to the ongoing de minimis threshold issue that impacts trade.
The associations emphasized the importance of their partnership, stating: “All three of our countries are part of a vital textile and apparel co-production chain that generates $20bn in two-way trade and supports over 1.6 million jobs under the United States-Mexico-Canada Agreement (USMCA).”
The US textile sector heavily relies on exports to Mexico and Canada, which represent $12.3bn—or 53%—of total US textile exports globally. These exports often return to the US as finished products under the USMCA framework.
Mexico contributes $9bn annually in textile and apparel exports to the US, making it the fourth-largest textile exporter and sixth-largest apparel supplier to the country. Meanwhile, Canada ships $1.8bn worth of textiles and apparel to the US and Mexico combined, with the US receiving 64% of Canada’s global textile exports. This includes specialized materials like flame-resistant fabrics and medical supplies such as PPE.
NCTO president and CEO Kim Glas expressed support for efforts to tackle illegal migration and the fentanyl crisis but urged the Biden administration to avoid imposing punitive tariffs on USMCA trade partners. “Such tariffs would only benefit countries like China, which don’t adhere to fair trade practices, while harming the US textile sector and its supply chain in the Western Hemisphere,” Glas explained.
She also called for the immediate elimination of the de minimis tariff exemption, which allows imports valued at $800 or less to enter the US duty-free. Glas argued this loophole undermines the US textile and apparel industries while aiding competitors like China and facilitating the flow of illegal goods, including fentanyl, into the US market.
Bea Chiem, managing director of retail and consumer at S&P Global Ratings, warned that while a universal tariff has yet to be enacted, its introduction could exacerbate cost pressures for consumer and retail businesses. She noted that in the current inflationary climate, transferring these costs to consumers may prove challenging for fashion brands and retailers.
“Broad-based tariffs could impact more US retail and consumer companies than they did during the 2018 tariff rounds,” Chiem added. “With over 24% of retail credits and 19% of consumer credits already having negative outlooks, the sector has little room to absorb additional economic pressures.”
Earlier this month, President Trump introduced several new tariff measures, including a 25% tariff on Mexican and Canadian goods, with a reduced 10% rate for Canadian energy products. Additionally, China faces new tariffs of 10% to 15% on select US products. Trump also imposed a 25% tariff on steel and aluminum imports into the US, further escalating trade tensions globally.
