On Dec. 19, Mexico President Claudia Sheinbaum announced an increase in tariffs on textiles and apparel imports and ended the practice of “border-skipping,” wherein many U.S. ecommerce sellers leveraged nearshoring to avoid tariffs on Chinese goods. Under the loophole, importers could avoid these tariffs using the Section 321 provision and shipping to Mexican warehouses as fulfillment hubs for low-cost finished products that are then sent directly to U.S. consumers.
“The increased tariffs and cessation of duty-free imports puts apparel brands in a scramble to find alternative fulfillment solutions and consider shifting strategies from nearshoring via Mexico to reshoring their operations in the U.S.,” said Ryan Martin, President of Distribution and Fulfillment at ITS Logistics. “This is costing companies money today, and even if there is a postponement on tariffs, it’s not a winning strategy for companies to just wait and see what happens.”
“We’ve already received an influx of referrals and inquiries from companies looking for someone who can help them pivot and offer them customized distribution solutions with immediate warehouse space in our U.S. facilities,” explained Martin. “Apparel distribution requires an exceptional amount of technical and operational expertise. There’s a difference between being able to do it fast and being able to do it right—fortunately, we do both.”
Before the Dec. 19 ban, apparel imports under the IMMEX (Manufacturing, Maquiladora, and Export Services Industry) program were given a “Made in Mexico” designation from U.S. Customs. CNBC’s Lori Ann LaRocco explored this loophole in depth with “How China is Using Mexico as a Backdoor to Avoid US Tariffs,” broadcast on CNBC.com.
Both Chinese companies and European companies that once manufactured products in China are now diversifying supply chains by manufacturing in Mexico, a trend that can be seen in the amount of containers transporting Asian raw materials and components into the southern neighboring nation of the U.S. From January to August 2024, China to Mexico trade was up 22% year over year, on top of a 33% increase in trade in 2023. This trend contributed to the designation of Laredo, Texas, as one of the busiest ports in the U.S. in 2024.
“There’s no discounting the impact these tariff increases are having on companies,” continued Martin. “And while controlling import costs immediately is important, this is an opportunity for company leaders to challenge their current approach, take stock of their entire supply chain, and find ways to optimize through long term strategic partnerships that provide tangible cost savings and efficiency gains.”
ITS Logistics’ 3.7 million square feet of distribution and fulfillment space, located in Texas, Nevada, and Indiana, provides reshoring solutions, enabling distribution to 95% of the U.S. in two days. Services include B2B, D2C, retail, and omnichannel fulfillment, handling business needs from a single small parcel ecommerce delivery to less-than-truckload (LTL) and full truckload distribution.
As an experienced 3PL partner, ITS offers a range of scalable capabilities for apparel and textile businesses:
- Strategically located distribution centers: 3.7 million square feet of FTZ-capable distribution and fulfillment space with immediate availability, enabling distribution to 95% of the U.S. in two days.
- Import solutions: #12 ranked drayage and intermodal provider powered by ContainerAI, a real-time container visibility and management platform.
National carrier network: A top 20 asset-lite truckload provider combining dedicated assets, highly vetted carrier partners, and drop trailer and trailer pool services.
- Leading-edge technology: Proprietary, cloud-based tech ecosystem with next-generation AI and the right partnerships, powering supply chain decision-making, first-to-final mile visibility, and managed solutions.
- Less-than-truckload (LTL) and pool distribution: Custom, tailored solutions leveraging national, regional, and niche carriers to reduce middle- and final-mile costs.
