Recent changes to Mexican customs regulations may dramatically impact US-based importers who use Mexico as a junction for imports from China for subsequent distribution in the United States. With this change, these e-commerce sellers, particularly those who import textiles and apparel, will face significant duties, and may need to find alternative distribution channels.
Here’s the background:
The Mexican Tariff Shift
On December 19, Mexican President Claudia Sheinbaum signed an act that effectively raised tariffs on apparel imports from countries including China to as high as 35%. Additionally, the act made significant changes to its IMMEX program, which had exempted importers of certain goods or raw materials from duty payments.
These changes are just the latest disruption in the shifting trade landscape between the US, Mexico, and China.
Since the US-China trade war started during the first Trump administration, Chinese imports to the US gradually fell while Mexican imports gradually rose:
- China’s share of total US annual imports from 2017 to 2023 fell from 22% to 14%
- At the same time, Mexico’s share rose from 13% to 15%
As a result, Mexico replaced China as the US’s largest trading partner.
At the same time, Chinese trade with Mexico surged, with more and more raw materials, components, and products moving from China to Mexico, many of them ultimately destined for the US market.
The Impact on Mexico’s Role as an Intermediary
Mexico has been imposing tariffs on some Chinese goods since 2023, impacting about 90% of Chinese goods imported to Mexico.
Still, many Chinese manufacturers and US importers have increased trade with Mexico over the past few years. Here’s why:
- Mexican tariffs were still usually lower than US duties
- The USMCA trade agreement facilitated low-barrier trade between Mexico and the US
- The IMMEX program allowed many imports ultimately destined for the US to enter Mexico duty-free
For the same reasons, with IMMEX possibly the most important, in the last few years many US e-commerce sellers increased Chinese ocean imports to Mexico and set up distribution centers there. This allowed them to quickly fulfill US orders from warehouses in Mexico, with goods entering the US duty-free via the de minimis exemption.
The recent Mexican tariff hike on Chinese goods could significantly raise costs for importers of these goods to Mexico, complicating the calculus that has facilitated the China to Mexico shift of the last few years.
The Need for Supply Chain Flexibility in 2025
The global shipping world had already been anticipating direct challenges to de minimis regulations, which would significantly impact the surge of e-commerce volumes entering the US from China, mostly by air. In fact, some companies may already be shifting some of their goods to China-Mexico or US ocean freight.
This new tariff increase is another factor that will complicate supply chain decisions for e-commerce sellers importing to Mexico and then to the US in 2025.
It is likely only the precursor to a volatile year for US-based importers.
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