“People often ask why brands don’t just manufacture somewhere else,” Mercieca says. “Tariffs are variable costs; rebuilding a supply chain is a capital decision.”
Nearshoring options may exist on paper, but they are not yet realistic for premium intimates at the scale and consistency Embrace needs, she says. Colombia, for example, has a strong intimates manufacturing base and favorable US trade access, but is also caught up in forced labor tariff investigations. “At this point, you never know where to move production to, because the ground keeps shifting under whichever country you’d pick,” Mercieca says.
For independent brands, minimum order quantities make that transition even harder. Large apparel groups can help fund new machinery, training or capacity; smaller brands have to work with the manufacturing capability that already exists.
Nathaniel J. Halvorson, a partner in Baker McKenzie’s International Trade practice, who was involved in the development of USMCA, says North and Central America remain structurally attractive, because shorter supply chains, faster replenishment and greater resilience still carry commercial value, even as the rules evolve. Companies, however, need to understand where they depend on tariff preferences or particular rules of origin, which products are most exposed, and what alternative sourcing strategies could be viable before policy changes require rapid decisions.
Trade policy can shift quickly, but the commercial impact may not register immediately. Sourcing decisions, production schedules, supplier commitments, and contracts are typically made months before products reach the border.
“That said, we continue to see textiles and apparel getting special attention as new tariffs are rolled out,” Halvorson says.
Tightening the system
So what happens next?
Halvorson says the regional economy is too integrated to simply unwind, but individual sectors and rules remain exposed to political pressure. “Companies should expect targeted renegotiation rather than wholesale abandonment,” he says. “Rules of origin will be central to the renegotiation, especially for sectors like textiles and apparel.”
If policymakers conclude that current rules allow too much non-regional content to qualify for USMCA benefits, those provisions are likely to face closer scrutiny. “Under the surface, a lot of that regional value depends on single-source input from Asia,” Halvorson says.
Wilbur Ross, who served as US Commerce Secretary during Trump’s first term, expects a push for tighter rules of origin and stricter treatment of transshipment. For Mexico, Ross argues, the objective should be to preserve a relative tariff advantage over non-North American competitors, rather than focus solely on absolute tariff reductions. “In industries like footwear, where Mexico, China, and Vietnam dominate, historically success means ensuring tariffs on China and Vietnam are higher than those on Mexico,” he says.
For Glas, preserving USMCA’s value means tightening the system around it: stronger customs enforcement, greater deterrence for trade fraud, rules that prevent non-regional content from qualifying for duty-free treatment, and closer coordination with Mexico to protect legitimate regional production.
She describes two forms of fraud that she says undermine legitimate regional production: garments fully made in China routed through Mexico and falsely declared as Mexican-origin, and garments cut and sewn in Mexico using non-USMCA yarn or fabric while claiming regional inputs. “They may buy a little from a domestic mill, but then behind it are boxes from Pakistan and India and everywhere else to try to get that duty-free access to the US market,” Glas says.
