A US tariff mechanism known as Section 338 threatens to dismantle the tariff certainty that apparel and textile sourcing teams have built their North American nearshoring strategies around, Fibre2Fashion reports.

For the past several years, brands and vendors have shifted cut-and-make programmes from Asia to Mexico, Central America and the Caribbean precisely because duty-free or low-tariff access to the US market made the shorter lead times economically viable. The prospect of Section 338 being applied removes that assumption from sourcing calculations.

The development lands at a moment when supply-chain planners are already repricing programmes amid shifting US tariff policy across multiple origins. Nearshoring business cases in this hemisphere depend on a stable differential between Western Hemisphere duty treatment and the tariffs applied to Asian production. If Section 338 narrows or eliminates that gap, the landed-cost math that justified higher regional unit costs no longer holds.

What does Section 338 change for sourcing teams?

The provision sits outside the standard trade-remedy toolkit that apparel importers price into their operations — anti-dumping and countervailing duties, and Section 301 tariffs on China. A new, additional tariff lever aimed at regional trading partners introduces a distinct planning problem: programmes relocated specifically to avoid Asian tariffs could face duties at their new origin.

For sourcing directors, that means:

• Nearshored programmes in Mexico and Central America can no longer be treated as tariff-safe fallbacks.
• Cost models comparing Asia versus Western Hemisphere origins need rebuilding with a Section 338 scenario.
• Contract language on tariff pass-through with regional vendors may need renegotiation before fall and holiday 2025 bookings.
• Lead-time advantages alone may not offset lost duty benefits on commodity programmes.

Who pays and what happens next?

As with earlier tariff rounds, the importer of record — typically the brand or its US buying agent — carries the initial duty exposure. Vendors holding FOB terms will feel the pressure indirectly, through demands for price concessions or volume shifts back to lower-cost origins. Factories in Mexico and Central America that expanded capacity on nearshoring demand now face utilisation risk if buyers pause or reroute orders while the tariff question resolves.

The report frames the situation as the end of certainty rather than the immediate imposition of new duties. That distinction matters for planning: this is an announced policy risk, not yet a confirmed cost. Sourcing teams will need to separate what is legally in force from what is threatened, and price the probability rather than treat the worst case as settled.

Fibre2Fashion's analysis signals that the era in which North American nearshoring carried a predictable tariff advantage has closed, and buyers weighing 2025 and 2026 programmes should expect tariff outcomes at regional origins to remain unsettled until Washington clarifies how, and whether, Section 338 gets applied.