From findings of the 2020 USFIA Fashion Industry Benchmarking Study :
The surveyed U.S. fashion companies demonstrate more readiness and interest in using the US-Mexico-Canada Trade Agreement (USMCA) for apparel sourcing purposes in 2020 than a year ago:
For companies that were already using NAFTA for sourcing, the vast majority (77.8 percent) say they are “ready to achieve any USMCA benefits immediately,” up more than 31 percent from 2019.
Even for respondents who were not using NAFTA or sourcing from the region, about half of them this year say they may “consider North American sourcing in the future” and explore the USMCA benefits.
Nevertheless, when asked about the potential impact of USMCA on companies’ apparel sourcing practices, some respondents expressed concerns about the rules of origin changes. These worries seem to concentrate on denim products in particular. For example, one respondent says, “USMCA changes negatively affects our denim jeans sourcing particularly with the new pocketing rules of origin.” Another adds, “Denim pocketing ROO change is a concern but manageable.”
It also remains to be seen whether USMCA will boost “Made in the USA” fibers, yarns, and fabrics by limiting the use of non-USMCA textile inputs. For example, while the new agreement expands the Tariff Preference Level (TPL) for U.S. cotton/man-made fiber apparel exports to Canada (typically with a 100 percent utilization rate), these apparel products are NOT required to use U.S.-made yarns and fabrics.
Related readings:
- USTR Factsheet: Textiles and Apparel and the US-Mexico-Canada Free Trade Agreement (USMCA)
- Apparel-specific rules of origin in USMCA
- USITC Economic Assessment Report on USMCA—Textile and Apparel Sector Summary
FASH455 Global Apparel & Textile Trade and Sourcing 
There are obviously a lot of benefits of having trade agreements with your neighboring countries but that doesn’t mean that it’s possibly to make everything domestically. I understand the perspective of U.S. apparel brands and retailers regarding difficulty with domestic sourcing but I’m really interested in knowing how Mexico feels about these trade deals. I feel like so much of the conversation is centered around the needs of the U.S. so it would be nice to hear an outside perspective regarding these free trade deals.
I really like your comment, Aly! I agree that trading with neighbors is beneficial due to factors such as geographic proximity (potential for lower lead times & less costly transportation), but this must be contrasted against the limited variety of items that can be produced in Mexico – and also Central America when considering CAFTA-DR. I like how you brought up that the conversation so frequently revolves around the needs of the US, but because trade involves more than one country, it is important to consider the impacts on the other parties. I would love to learn more about the specific needs and goals of the Mexican/Central American garment industries, and this would no doubt be helpful for strategizing how to better develop their industries to produce a wider variety of garments beyond mostly pants and tops, which would in turn benefit the US.
While I do understand that the USMCA aims to increase the amount of products made domestically and improve the US, Mexico, and Canada’s economies, I think that companies raising concerns is also understandable. Sourcing has been traditionally outsourced to countries who are able to service needs at the lowest cost. By pulling the sourcing back to North America, this can cause issues for companies who have set contracts with foreign factories and suppliers. This also can make a big impact on their sourcing costs. While the USMCA does give companies a relatively good amount of time to revert their sourcing back to North America, in the grand scheme of things, this time pressure could be problematic when completely reevaluating sourcing strategies. However, bringing a majority of sourcing closer to home, these companies will be able to cut down on transportation costs. It will be up to the companies to perform a cost benefit analysis and analyze their new costs with these new guidelines in place.
The above comment is written by me, Maggie Moore. I now have changed my username and for some reason it is not changing on my previous reply.
I can definitely see the benefits that USMCA could offer, the idea that it is designed to support mutually beneficial trade and promote robust economic growth in North America is definitely appealing. I also like the idea that the “Yarn Forward” rule will remain unchanged. However, I can see how USMCA can cause issues with long term agreements already made outside of the Western Hemisphere, for instance with Asian countries. I think that the idea of USMCA is a good one but that it will take longer than expected to allow previous trade agreements to fizzle out in order to be successful.
Hi Lyndsey,
I also like that yarn forward will remain unchanged. It is very beneficial to US companies. However, I cannot help but wonder just how yarn forward effects other countries and their economies. I know it can be a very controversial issue. I also agree that it may take some time to see the real impacts of the USMCA because we were so focused on globalization for so long.
Although the USMCA can be positive, I do see how issues could arise. It is beneficial that responders that were not using NAFTA are now considering it and that the USMCA will hopefully bring more production back North America. However, not all textile products can be made in North America because we have relied so heavily on globalization in the past. It can also be seen as a positive that 78% of respondents are ready to receive benefits, but I see how some respondents are still hesitant.
Like everyone has stated, I understand why USMCA is being pushed so hard. There is a lot of benefits to keeping sourcing on the Western Hemisphere, where it grows the textile industry on our side and decreases lead time in production. A thought that I have is, do we have the resources for that strategy? Part of the reason why fashion retailers outsource to Asia is because they have the infrastructure and resources for these companies’ orders at cheaper costs. I do not believe that the U.S/Canada/Mexico have that sort of infrastructure and it would cost more for retailers. And like Aly said, a lot of these conversations are really designed to benefit first-world countries, particularly the United States. What about Canada? What about Mexico?
-Afia Asamoah
I like the idea of USMCA but there are a lot of people that it screws over in a way. The textile industry has a big advantage compared to the apparel industries that are at a disadvantage in a way. The reason it causes a lot of concerns and discourse is because of loopholes. Nonetheless I think it is a good idea to be more self-dependent and that is exactly what USMCA does, trying to promote more trade within North America and less from Asia.
what do you mean ” a good idea to be more self-dependent and that is exactly what USMCA does, trying to promote more trade within North America and less from Asia.”?
The United States is abundant with capital so producing more textiles instead of clothing would be a smart move especially since the recently passed USMCA which includes the same “yarn forward” rule of origin as NAFTA. This is beneficial for the US because it means that yarn used to form fabrics must originate from the US, Mexico, or Canada and the US already exports a lot of textiles because we are a capital abundant country and have the ability to produce a large volume of textiles.