Free Webinar: Textile and Apparel Sector CUSMA Compliance & Audit Readiness

The urgency around CUSMA compliance and audit readiness for textiles and apparel stems from the agreement's mandatory joint review set for July 2026, six years after its July 1, 2020 entry into force. This review will assess the pact's effectiveness and decide on extension for another 16 years, modifications, annual reviews, or potential expiration in 2036 if no consensus emerges.

The textile and apparel sector depends heavily on CUSMA's yarn-forward rules of origin in Chapter 6, requiring North American production from yarn onward for duty-free access. This supports integrated supply chains across the U.S., Mexico, and Canada.

In 2025, U.S. tariffs imposed under the International Emergency Economic Powers Act (IEEPA)—initially 25% on many goods from Canada and Mexico, later increased to 35% for some categories—exempted only CUSMA-qualifying items starting March 7, 2025. This shifted duty-free status from a benefit to a near-essential cost avoidance mechanism for non-qualifying goods.

U.S. textile interests, including the National Council of Textile Organizations, have advocated strengthening rules ahead of the review by curbing exceptions like tariff preference levels and boosting tri-national customs enforcement against transshipment and unfair practices.

Customs verification and audits have grown more rigorous across the three countries, with increased post-clearance reviews and demands for detailed origin documentation. Non-compliance exposes firms to duties, penalties, and supply chain disruptions.

For producers, importers, and exporters in this sector, inadequate audit readiness risks losing preferential treatment amid tariff exposure, higher costs, and competitive disadvantages—especially as the 2026 review could tighten origin thresholds or enforcement.