For years, many e-commerce sellers in the U.S. have depended on China for sourcing and importing inventory to sell to American shoppers. Through the Section 321 de minimis provision, they’ve enjoyed a cost effective way to ship products through Mexico.
That’s where nearshoring became an obvious cost-effective strategy for e-commerce sellers. Nearshoring allowed sellers to move inventory closer to their target market, which is the United States. With Mexico, sellers used favorable importing laws to set up their base for Chinese reexports.
Recently, the United States implemented new executive orders to curb the exploitation of this loophole. Sellers practicing nearshoring in Mexico must now critically reassess their sourcing and fulfillment strategies.
In this article, we will evaluate these strategies, analyze their impact, and offer insights into how commerce sellers can navigate these policies and sell in the United States.
Timeline impacting US Imports through Section 321 and Where These Policies Stand Today
Over the past few months, several policy updates have affected how e-commerce sellers import goods from China to the US through Mexico.
Let’s take a look at these policy amendments and where they stand today:
Mexico’s Textile Tariff Changes: December 19, 2024
The Mexican government, under President Claudia Sheinbaum, issued a decree announcing increased import tariffs on finished textile inputs and final products.
How does the new Textile Tariff affect Nearshoring in Mexico?
The decree now mandates a 35% tariff on finished textile and apparel products.
For textile inputs, the decree increased the tariffs to 15%.
The proposed 35% hike will affect finished textile products across Chapters 61, 62, and 63. The 15% tariff revision will impact articles meant for import falling under 52, 55, 58, and 60. In total, these changes will affect more than 155 items when imported into Mexico.
When did the amendment come into effect?
The decree took effect on December 20, 2024. The implemented tariffs will remain in place until April 23, 2026.
The U.S. Section 321 Policy Revisions: February 4, 2025
On February 4th, President Trump signed an executive order to eliminate the de minimi exemptions under Section 321 for goods originating from China. This move meant that low-value shipments (under $800) from China would now be subject to tariffs.
The United States also imposed a 25% tariff on imports from Canada and Mexico, making nearshoring practices costly.
Import Tariff Revisions for Steel through Section 232: February 10, 2025
The United States also increased tariffs on Aluminium articles and derivatives from 10 to 25%
Cool off Period: Feb 6-March 3, 2025
The United States agreed to a 30-day delay in the implementation of the new tariffs for Canada and Mexico.
The suspension of the deminis hasn’t been implemented yet since the CBP will have to work on the process framework.
Revised Import Tariffs Come Into Effect: March 4-12, 2025:
New tariffs on imports from Canada and Mexico are in effect.
There is an additional 10% tariff on imported goods manufactured in China, raising it to 20%.
The section 232 tariffs on steel and aluminium will come into effect on March 12th.
Implications of New Tariffs Change on Mexico Nearshoring
While nearshoring in Mexico previously offered e-commerce sellers numerous advantages, the new tariffs will significantly alter the selling price and the ability to remain competitive in the market. Let’s analyze the implication of the new changes on e-commerce sellers:
- Re-export of Finished Textile becomes costly: The Mexican Decree impacts sellers who previously relied on re-exporting goods, finished apparel products through Mexico. To leverage the de minimis provision that continues to be in effect, you will have to bear higher costs due to the 35% textile tariff.
- High-value Steel and Aluminium Products: Shipments containing steel and aluminium derivative items above the de minimis threshold of US$800 and falling under Section 232 will attract a 25% tariff.
- Higher Costs: The combined effect of the de minimis suspension and the textile tariff will lead to higher costs for e-commerce sellers, impacting their profit margins.
- Low-Value E-commerce Products Will Lose Their Duty-Free Status: The de minimis suspension means that low-value e-commerce products from China transshipped through Mexico will lose their duty-free status in the long run.
- Formalized US Entry: Sellers may need to opt for formalized U.S. entry, which involves more stringent customs procedures and potentially higher duties and tariffs.
Impact of Trump Tariffs on Popular E-commerce Categories
The impact of these policy changes varies depending on the product category, the value of the shipment, and its composition. For an overview of popular items that will attract higher tariffs, here’s a general list of e-commerce categories:
Section 232 Revisions: Impacted E-commerce Categories
- Home Improvement: Products such as tools and building materials like nails, staples, wires, and hardware are used for construction and home maintenance.
- Automotive Parts: Engines and engine parts, electrical and electronic equipment, steering and suspension components, brake systems, transmission and power train parts, seating and interior trim, and metal stampings.
- Electronics: Products like circuit boards, enclosures, connectors, computer accessories, and consumer appliances will attract higher tariffs.
- Furniture and Decor: metal lamps, cookware, tableware, and storage containers.
- Sports and Outdoors: Skis, sports equipment, outdoor sporting goods, and camping equipment.
Mexico IMMEX Tariff Revisions: Impacted E-commerce Categories
- Textile and finished goods: This category includes a wide range of finished apparel, such as coats, suits, jackets, dresses, sweaters, trousers, and shirts. Essentially, any ready-to-wear clothing item falls under this category.
- Textile home goods: This category includes products used to cover household items. Some of them include bed linens (sheets, pillowcases), blankets, towels, curtains, and upholstery fabrics.
- Textile Inputs: Raw materials used in textile manufacturing and creating other textile items like yarns, fabrics (woven, knitted), and various textile fibers.
Navigating the Evolving Trade Landscape
As an e-commerce seller relying on nearshoring in Mexico and using the de-minimis loophole, the recent tariff revisions require you to assess the situation and adapt to cost-effective practices. What are your possible options to navigate these policy changes? Let’s find out:
- Using the Current Timeline Leeway to Import into the U.S.: While changes are being phased in, the deminimis loophole still applies. Until the Customs and Border Protection Force applies relevant frameworks and personnel, you can leverage the benefits for importing shipments valued under $800.
- Shifting Sourcing Options to Countries That Enjoy Free Trade Agreements with the US: While imports from Mexico and Canada face revised tariffs, you can explore sourcing products from other manufacturing hubs. Choose countries with free trade agreements with the U.S. and shared economic values. This way you can gain access to duty-free provisions or reduced-duty while importing into the U.S.
- Consolidating Shipments to Under $2500 USD, Choosing Informal Entry and Fast-Tracking Clearance: While the de minimis threshold is changing for low-value goods from China, it hasn’t come into effect yet. Importing through informal entry is relevant for sellers looking to import large-value shipments above $800 and under $2500. Opting to bear tariffs, you can partner with reputed fulfillment partners to consolidate shipments for import and minimize tariffs by declaring manufacturing costs.
- Opting to Import and Choose Localized Fulfillment Options to Offset the High Cost of Reshoring: A 25% tariff is viable for sellers looking to import large shipments of aluminium and steel-based products. While importing costs may increase, sellers can look at localized fulfillment with a scalable infrastructure to avoid costly overheads and reduce shipping costs. By offsetting costs that come with fixed warehouses, you can sell products at competitive prices.
Overcoming the impact of import policies can be challenging for e-commerce sellers in the U.S. You need to leverage short-term gains to sustain your sales and build a resilient supply chain for the long run. That is where partnering with a reliable fulfillment provider helps your business.
How Locad Can Help Your E-commerce Business
Partnering with a reliable e-commerce fulfillment provider is crucial for business success during policy changes. A trusted partner like Locad can help you streamline your business operations, reduce compliance risks, and optimize last mile delivery strategies.
Scale and Descale Amid Evolving Trade Policies
Locad offers your business flexible warehousing facilities in the U.S., allowing you to strategically store your inventory closer to your customers and offset costly overheads associated with fixed infrastructure. Access tech-driven features tailored to your business’s growth stage and aspirations at the most affordable pricing.
With Locad, your business gets a team that monitors the situation on the ground and helps you navigate evolving import policies and regulations. Get the best of infrastructure, tech, and people to help you consistently tailor an unmatched customer experience from your storefront to the customer’s doorstep.
Optimize Costs through Localization
Succeeding in an evolving and competitive market like the U.S. requires optimizing spending while adapting to market changes. With Locad, you can cater to demand when trade policies favor your product or when customer demand soars. During non-seasonal lows, minimize the space you require in our warehouse and reduce stocking up inventory that attracts high holding costs. Our scalable inventory storage solution lets you scale up and down with minimal capital risk.
Partner with local last-mile delivery to offer nationwide serviceability and faster shipping times at lower costs. By storing inventory across the US and with the right shipping partner, you can reduce shipping costs by auto-assigning the cheapest carrier option.
While importing shipments from other countries, add a touch of localization for the domestic market with Locad’s value-added services. Enlist Locad’s help for labeling, kitting, and assembly to ensure your shoppers receive products with a localized touch.
Integrated End-to-End U.S Fulfillment Services
Whether you deliver orders to customers or manage B2B inventory to replenish stock at retail outlets, Locad lets you manage both from a single interface. Streamline your e-commerce operations with an integrated fulfillment partner that can handle all your selling across different types of storefronts. Eliminate the need for multiple partners and disparate systems, simplifying workflow to prevent shipment delays and stockouts.
Centralize your fulfillment with one provider and reduce inefficient practices. Automate order processing by syncing orders across multiple marketplaces. Enjoy smoother stock replenishment, improved inventory handling, and proper batch management to avoid dead stocks. With Locad as your integrated fulfillment partner, get a comprehensive solution that lets you focus on growing your business without worrying about end-to-end fulfillment.
Conclusion
The shifting trade landscape presents both challenges and opportunities for e-commerce sellers who rely on importing goods into the U.S. While nearshoring in Mexico remains a viable option, increased tariffs and policy changes require strategic adaptation. If left unchecked, sellers will have to bear these high costs and increase the prices that will cost them their customers.
Sellers must focus on outweighing higher tariffs’ costs through more intelligent supply chain diversification. By building a resilient supply chain for the long run and with localized fulfillment practices, e-commerce sellers can protect their inventory and sales from price hikes and maintain competitive pricing in the U.S. market.
