A 50% tariff could hang over duty-free textile and apparel trade between the United States, Mexico and Canada if Washington chooses to invoke Section 338 of the Tariff Act of 1930 — a question now being debated across the sourcing community, as reported by Fibre2Fashion.

The stakes for supply-chain managers are direct. USMCA's duty-free treatment underpins a substantial share of regional textile and apparel production, particularly yarn-forward qualifying goods moving from Mexico into the US market. Any mechanism that could subject those flows to a 50% duty would reshape landed-cost calculations overnight and force brands to re-examine nearshoring decisions made on the assumption of tariff-free access.

What is Section 338?

Section 338 is an obscure provision of the Tariff Act of 1930. It authorizes the US president to impose punitive duties — at levels up to 50% — on goods from countries deemed to discriminate against American commerce. The statute has sat largely unused for decades, but its revival as a talking point in trade-policy circles has prompted analysts to ask whether it could be applied to USMCA partners.

That possibility sits uncomfortably with the treaty framework. USMCA locks in duty-free access for qualifying textile and apparel goods under yarn-forward rules of origin. The open question, which the Fibre2Fashion report frames in its headline, is whether a unilateral statutory tool such as Section 338 could override or sit alongside those treaty commitments.

Who pays and what changes?

For sourcing directors, the analysis is not academic. A shift from duty-free treatment to a 50% tariff on Mexican or Canadian textile imports would:

• Reprice nearshore production relative to Asia alternatives
• Trigger contract renegotiations over tariff cost pass-through
• Force a review of USMCA certification pipelines and qualification strategies
• Raise questions about whether existing free-trade-agreement sourcing plays retain their cost logic

Whether any administration would actually deploy the statute against treaty partners remains unconfirmed. The report raises the scenario as a risk question rather than documenting an applied measure, and sourcing teams should treat it accordingly — as a contingency to model, not a tariff already in force.

The debate itself signals a broader reality for 2025 planning: long-settled assumptions about regional duty-free access now carry policy risk, and buyers hedging between nearshore and offshore production will need to price that uncertainty into their sourcing decisions going forward.