How Mexico’s Section 321 Changes Impact Your Supply Chain Strategy

Recent changes to Mexico's trade policies have created significant implications for brands using Section 321 fulfillment strategies. Here's what you need to know and how to adapt your supply chain approach.

The Policy Change

On December 19, Mexico's government issued an immediate decree that affects how companies can import and distribute goods through Mexico to the U.S. Key changes include:

• New tariffs on 121 apparel products and 17 textile items (increased from 20-25% to 35%)
• Additional 15% duty on 17 tariff headings related to textiles (up from 10%)
• Restrictions on the IMMEX program for certain finished products
• Immediate implementation affecting goods in transit

Impact on Supply Chain Operations

If your brand uses Section 321 fulfillment through Mexico, you may experience:

• Increased costs on affected product categories
• Need for immediate supply chain restructuring
• Potential disruptions to existing fulfillment processes
• Changes in delivery timeframes

Practical Steps Forward

Consider these strategies to maintain efficient operations:

1. Assess Your Current Exposure

• Review which products are affected by the new tariffs
• Calculate the cost impact on your operations
• Identify immediate risks to your supply chain
• Evaluate current inventory positions

2. Explore Alternative Options

• Evaluate different fulfillment locations
• Consider direct shipping alternatives
• Assess domestic manufacturing options
• Review other international sourcing locations

3. Optimize Operations

• Update inventory management strategies
• Revise demand forecasting models
• Adjust pricing strategies as needed
• Review customer service protocols

Planning Your Transition

As you adapt to these changes, focus on:

1. Immediate Action Items
   1. Document affected SKUs
   2. Calculate new landed costs
   3. Communicate with suppliers
   4. Update pricing if necessary
2. Medium-Term Planning
   1. Research alternative fulfillment methods
   2. Evaluate new partnerships
   3. Update forecasting models
   4. Revise budgets
3. Long-Term Strategy
   1. Develop more resilient supply chains
   2. Consider vertical diversification
   3. Build in additional flexibility
   4. Plan for future regulatory changes

Additional Considerations

Keep in mind:

• Supply chain transitions take time
• Maintain clear communication with partners
• Document all process changes
• Monitor performance metrics closely

Moving Forward

While these changes present immediate challenges, they also offer an opportunity to build more resilient supply chain operations. Consider working with experienced fulfillment partners who can help navigate these transitions while maintaining service levels.

For specific questions about how these changes might affect your operations, consider consulting with your logistics partners or supply chain advisors.