Trump's 'America First' policy and threatened tariffs on imports from Mexico and Canada, coupled with Mexico's own protectionist tariff hikes, disrupted established fashion supply chains. Companies previously leveraging Mexican border towns for cost-effective warehousing and the US de minimis exemption for duty-free goods were forced to reassess their strategies.
The changes led to a significant shift of warehousing operations from Mexico to the US. While simpler than reshoring manufacturing, this move increased costs due to higher US labor costs and increased demand for domestic third-party logistics providers. This impacted businesses like Twillory and Ministry of Supply, forcing them to move their inventory, resulting in increased costs and sometimes split shipments for customers. The situation highlights the economic consequences of trade policies and their effects on businesses and consumers.
Several companies, including Twillory and Ministry of Supply, relocated their warehousing from Mexico to the US to avoid increased tariffs and ensure continued business operations. However, the transition came with significant cost increases. The article emphasizes the challenging new reality for brands, predicting potential price increases for consumers due to increased fulfillment costs.