Mexican President Claudia Sheinbaum issued a decree that ends the popular “border-skipping” strategy used by many US e-commerce sellers to avoid tariffs on Chinese goods. This decision was announced on Dec. 19 and took effect immediately, primarily targeting apparel imports.
Quick Background: For many years, US e-commerce businesses have been importing goods in bulk from China into Mexico and then shipping them to the US as individual orders valued under $800, bypassing tariffs imposed on direct imports from China. This gave companies the combined financial benefits of paying less import taxes, shipping in bulk from China, and faster / cheaper individual shipments to the US (as opposed to shipping each individual order direct from China which takes longer).
The new decree introduces several significant changes:
- Import duties on 121 apparel products and 17 made-up textiles have been raised from 20-25% to 35%, and 17 tariff headings related to textiles now face a 15% duty, up from 10%.
- Certain finished products, including clothing and textile articles classified under HTS Chapters 61, 62, and 63, are now excluded from temporary importation under the IMMEX program.
- These changes are effective immediately, including on products currently in transit. Mexico couldn't have given companies 30 days notice? Jeez.
Why did President Sheinbaum do it?
By imposing the higher tariffs, Mexico aims to limit the influx of low-priced imports and level the playing field for local manufacturers. The increased import costs are expected to incentivize retailers and consumers to source products domestically, stimulate growth within the national textile sector, safeguard existing jobs, and potentially create new employment opportunities by supporting local businesses against foreign competition.
In the meantime… Companies taking advantage of this “border-skipping” strategy now face immediate higher operational costs and must explore alternative supply chain strategies to comply with the new regulations and/or pass on the increased cost to consumers.