According to a 2020 USFIA Fashion Industry Benchmarking study, more US fashion companies have agreed use the US-Mexico-Canada Trade Agreement (USMCA) for apparel sourcing purposes in 2020 than a year ago. For companies that were already using NAFTA for sourcing, 77.8 percent say they are ready to achieve any USMCA benefits immediately, up more than 31 percent from 2019.
Even for respondents who were not using NAFTA or sourcing from the region, about half of them this year say they may consider North American sourcing in the future and explore the USMCA benefits.
Nevertheless, when asked about the potential impact of USMCA on companies’ apparel sourcing practices, some respondents expressed concerns about the rules of origin changes. These worries seem to concentrate on denim products in particular.
It also remains to be seen whether USMCA will boost ‘Made in the USA’ fibers, yarns, and fabrics by limiting the use of non-USMCA textile inputs. For example, while the new agreement expands the Tariff Preference Level (TPL) for U.S. cotton/man-made fiber apparel exports to Canada (typically with a 100 percent utilization rate), these apparel products are NOT required to use U.S.-made yarns and fabrics.
