With the official review of the United States-Mexico–Canada Agreement (USMCA) rapidly approaching, representatives of North America’s textile sector are hoping that the spirit of compromise will be enough to hold the trilateral trade truce together after a trying year.
At the National Council of Textile Organization’s (NCTO) annual meeting in Washington, D.C. on Thursday, the group’s president and CEO, Kim Glas, led a discussion with her counterparts from Mexico and Canada, highlighting the concerning drop in textile trade across all three markets.
“We’ve seen U.S. textile and apparel exports to Mexico and Canada fall 5 percent,” she said. “And we’ve seen that Asian suppliers, despite the penalty tariff, have enjoyed double-digit growth into the U.S. market.”
Glas and the textile industry leaders believe that despite its imperfections, USMCA represents the domestic sector’s best chance at banding together to revive Western Hemisphere operations and create jobs across all three nations.
“We need to work together in order to be able to compete against China, against Asia. For Mexico, this is crucial. We exported in 2024 $9.5 billion to the U.S., and last year was $7.5 billion, so we were 20 percent down. And that’s part of the problem that we are facing,” said Rafael Zaga Saba, president of the Mexican Chamber of the Textile Industry (CANAINTEX).
“If we are going to concentrate all our efforts on the duties, we are not going to succeed, because we are not going to be bigger than the Chinese government or the Asian governments, where they will subsidize all of their industry,” he added. “We need to make a team together to work together and to be able to convince our customers at the retail stores, all our consumers, to buy regional, buy in America, create jobs in America,” and create cash flow into the hemisphere.
“Within our association, there is approximately a 90 percent link to U.S. business. So the Canadian manufacturers of textiles buy raw material and work with partners here. Many of us have businesses in both countries, so the interconnectivity has never been bigger,” said Jeff Ayoub, chairman of the board of directors of the Canadian Textile Industry Association.
“It’s so important for us to keep this trade agreement and regional trading going. If not, we’re in some significant trouble. Our real GDP was about $1.8 billion last year, down 5.5 percent,” he added.
Like Saba, Ayoub said the U.S.’ imposition of tariffs on overseas supply chains is not a silver bullet when it comes to creating advantages for the Americas. And in some cases, duties could be inhibiting the growth of industry; for example, he hopes to see tariff exemptions on equipment that’s not made in the Americas, “to help everyone in this hemisphere be more competitive.”
“What we need to do is make sure that we position the manufacturers in this region to be able to compete on a global marketplace, make it an even playing field. When we’re getting hit with tariffs and punitive duties … on stuff that’s not made here, it just makes it more difficult for us to compete against the people over there, which are our real competitors,” he said. “We can, we can compete internally … But the real big competition is with what’s coming in from overseas, and we have to make sure we position everyone here to be able to compete fairly.”
Saba said one big issue for Mexico is customs enforcement, and he highlighted the deluge of cheap, China-made goods that have been flowing into his country at an alarming rate. This has caused strain on Mexico’s domestic producers, who are now competing for local consumers, and friction with the U.S., which has accused Mexico of acting as a duty-free backdoor for illicit and heavily tariffed products.
“We need to dedicate much more time to enforcement, customs, because we have good trade. The rules of origin are so hard to meet but we understand that if a good is made, yarn-forward and sometimes even fiber-forward under USMCA, it will provide business to all of our associates,” Saba said.
“With enforcement … we’ve got to find a way. We’ve got to do some tweaking, some adjustments, and continue advocating for the hemisphere,” Ayoub added.
“This is the biggest market in the world, so people are going to continue to try to penetrate and get revenue from this market. We have to make sure that we allow that to happen; we want people to be able to fight inflation, keep numbers down, have affordable living, etc., but we need to make sure that we are part of the mix,” he said.
When it comes to the steps Canada has taken to parlay with the American administration, Ayoub said border crossings and the smuggling of illegal drugs has been, and continues to be, addressed.
Meanwhile, Mexican leadership has taken concrete and aggressive steps to promote the textile industry, Saba said. “Our president is very involved, because we have more than 1 million people working on textiles. This is still very important for the for the workforce in Mexico. So she’s taking a step ahead, and she’s saying, ‘How do I make this workable again?’”
In December, Mexican President Claudia Sheinbaum announced the approval of a new tariff bill that includes duties as high as 50 percent on hundreds of China-made products like steel, cars and textiles, apparel and footwear—”exactly the products that we are making,” Saba said.
Late last year, Mexico’s Senate also rubber-stamped changes to the country’s Customs Law, or Ley Aduanera, which aimed to up enforcement and promote transparency when it comes to imports. The amendments, which took effect Jan. 1, included a provision to crack down on customs violations by holding both importers and customs brokers liable for undervaluation, tariff misclassifications and false or incomplete customs entries.
“We talked to the government about the customs brokers helping bad guys do this; she changed the law starting Jan. 1. We have a new law for commerce where… a custom broker—if he does something that is wrong, if he brings something at a dumping price, or he collaborates in one way, to an importer—he will go to jail,” Saba said.
Still, Mexico’s domestic textile industry has been facing similar strain to that felt by the U.S., where about 40 textile mills have closed over the past year.
“We have had a lot of complaints from a lot of industries saying [Sheinbaum has] been too tough on particularly textiles and footwear. The problem… is she’s getting tired because we keep closing companies and we keep reducing the number of jobs,” Saba said. “So either we get good jobs back, we demonstrate that with all the [changes] that she has made, we are in a better shape, or she will say, ‘Maybe they cannot do it.’ And I believe we can.”
“I believe the textile industry can come back. We have the biggest market in the world as a neighbor, and we have 130 million people in Mexico that have to dress every day,” he said.
When it comes to the upcoming negotiations, it helps that Sheinbaum has become a bit of a Trump whisperer, earning the respect of the American president with her measured demeanor and openness to dialogue.
The same can’t be said for Canadian Prime Minister Mark Carney, who has hit back hard at Trump’s tariff threats and taunts through retaliatory duties, ramped up rhetoric and trade deals with other nations—including China.
“There’s no doubt our prime minister is taking a little bit of a different tack on the way he’s negotiating. But there’s politics, there’s positioning, and then there’s good business, and they’re not always exactly in the same frame,” Ayoub said. “I think behind the scenes, there’s a lot of work being done to ensure stability. So while there are some different ways to get there, I think everyone’s working towards the same goal.”
