Mexico Fulfillment 2025: Why the Border Strategy Died (And What Amazon Sellers Should Do Now)
Six months ago, every logistics consultant was telling Amazon sellers the same thing: “Move your fulfillment to Mexico. Use Section 321. Avoid tariffs. Ship to US customers duty-free.”
As we enter 2026, that advice is not just outdated—it’s financially dangerous.
Executive Summary: Mexico’s cross-border fulfillment model collapsed in late 2024 after December tariff hikes reached 35% on apparel. Section 321’s duty-free import loophole ends completely in August 2025, eliminating the core advantage. For 2026, apparel sellers face unprofitable Mexico operations while US-based multi-node fulfillment becomes the dominant strategy. Here’s what changed in 2025 and what Amazon sellers must do now.
The shift happened fast. December 19, 2024 marked the turning point when Mexican President Claudia Sheinbaum signed a decree that didn’t just adjust trade policy—it eliminated the entire business model thousands of sellers relied on. If you’re planning your 2026 fulfillment strategy, here’s everything you need to understand about what died in 2025 and what replaces it.
What Actually Happened in Late 2024
On December 19, 2024, Mexico implemented immediate changes that killed cross-border e-commerce fulfillment: 35% tariffs on 138 apparel categories, 15% on textiles, and IMMEX program exclusions for finished goods.
Source Spotlight: Mexico’s Diario Oficial federal decree and logistics providers in Tijuana/Nuevo Laredo corridors.
IMMEX (Mexico’s Manufacturing, Maquiladora, and Export Services program) allowed duty-free imports for assembly/warehousing then export. This was the foundation of the strategy. E-commerce 3PL XB Fulfillment declared force majeure immediately, telling apparel clients they could no longer fulfill from Mexico.
Why Mexico Was Working (Until It Wasn’t)
Section 321 allowed shipments under $800 to enter the US duty-free. Sellers imported goods from China to Mexico duty-free under IMMEX, warehoused them near the border, then shipped individual orders to US customers—avoiding all import duties.
The math was simple: A $40 product facing 25-30% US tariffs entered completely duty-free through Mexico. Add lower labor costs and 2-3 day delivery, and you had a winning strategy.
Why Mexico shut it down: The textile industry contracted 4.8%, losing 400,000 jobs. Mexican officials faced pressure from the US (Trump called it “border skipping”), competition from Chinese platforms flooding their market, and companies abusing IMMEX by importing finished goods instead of manufacturing.
What Sellers Faced in 2025
For Apparel: Complete Collapse
35% tariffs made Mexico more expensive than direct US import. Example: Import to Mexico duty-free became import with 35% tariff, eliminating all cost advantage. Several sellers reported US 3PLs now cheaper even with labor differences.
For Non-Apparel: Window Closed
Additional regulations in January 2025 required more documentation. More critically, Section 321 ended August 29, 2025, removing the duty-free advantage entirely for all products.
Operational Chaos
Sellers with inventory in Mexico faced immediate problems: tariffs on goods in transit, unprofitable existing contracts, forced inventory relocation, and Q4 disruption mid-holiday season.
What Amazon Sellers Should Do in 2026
The 2025 Mexico fulfillment collapse forces a complete strategic reset. Here are your realistic options for 2026:
Option 1: US-Based Multi-Node Fulfillment
Use 2-3 warehouses across the US, ship from closest location to each customer.
Benefits: 30-50% lower shipping (Zone 1-2 vs 5-8), 2-3 day standard delivery, no regulatory risk.
Costs: Storage $0.40-0.85/ftÂł/month, pick & pack $3-6/order, shipping $6-9 nearby vs $12-18 cross-country.
Best for: 500+ orders/month nationwide. Providers: ShipBob, ShipMonk, Ryder.
Option 2: Canada Fulfillment (Limited in 2026)
Section 321 ended August 2025. Canada offers similar costs to US plus cross-border complexity. When it works: CUSMA benefits for specific products, existing Canadian operations. For most: US domestic is simpler.
Option 3: Amazon Multi-Channel Fulfillment
Leverage Amazon’s network for non-Amazon orders. MCF fees increased 3.5% but offer Preferred Pricing (up to 15% off). Best for: Already using FBA, want to fulfill Shopify/DTC from same inventory.
Option 4: Direct Import + Domestic 3PL
Import to US, pay duties, use one domestic 3PL. The advantage: Simplest, most predictable, no cross-border surprises. When it works: Products with duties under 15%, higher margins, prioritizing simplicity over marginal savings.
What to Expect in 2026: The New Normal
Section 321 Ended Globally in August 2025
As of August 29, 2025, Section 321 de minimis ended for all countries. All imports now face duties and customs scrutiny. The era of duty-free individual shipments is over, and 2026 marks the first full year operating under the new reality.
Don’t Build on Tariff Arbitrage in 2026
The 2025 policy changes made it clear: countries are protecting domestic industries, closing cross-border fulfillment loopholes, and requiring transparency. In 2026, your competitive advantage must come from operational efficiency, speed, service quality, brand loyalty, and genuine product differentiation—not regulatory workarounds.
Multichannel is Your 2026 Competitive Edge
With fulfillment costs stabilizing at higher levels across the board in 2026, winners will focus on multiple sales channels beyond Amazon, direct customer relationships that reduce platform dependency, operational efficiency through multi-node US-Mexico trade compliance networks, and brand strength that commands premium pricing despite higher logistics costs.
Decision Framework: What to Do in Early 2026
If you’re still using Mexico fulfillment:
- Calculate your new all-in costs with 35% tariffs (apparel) or increased compliance costs (other)
- Compare to US multi-node 3PL pricing—it’s likely cheaper now
- Plan transition by Q2 2026 before costs rise further
- Don’t wait for another policy shock
If you considered Mexico in 2025:
- For apparel: Completely unviable. Focus on US domestic strategies.
- For other categories: Window closed with Section 321 ending
- Get pricing from US multi-node providers—the Mexico fulfillment 2026 landscape now favors domestic optimization
If you’re planning 2026 fulfillment strategy:
- Primary: US multi-node fulfillment (2-3 locations) for nationwide coverage
- Hybrid: Amazon MCF for leveraging existing FBA inventory across channels
- Long-term: Direct import + domestic 3PL with optimized operations and transparent compliance
Insights & Updates for Smart Amazon Sellers
Common Questions About Mexico Fulfillment in 2026
Q: Is Mexico fulfillment completely dead in 2026?
For apparel, yes—35% tariffs make it unprofitable. For other categories, the Section 321 advantage that made Mexico attractive ended in August 2025. A few manufacturing operations remain viable under IMMEX, but the e-commerce fulfillment arbitrage model is finished.
Q: What happened to Canada as an alternative?
Canada was marketed as “the new Mexico” in early 2025, but Section 321 ending in August eliminated that advantage too. Some Canadian 3PLs still operate for US fulfillment, but without duty-free benefits, costs are similar to US-based operations with added cross-border complexity.
Q: Should I use multi-node fulfillment in 2026?
Yes, if you’re doing 500+ orders/month nationwide. Multi-node is now the dominant strategy for cost-effective domestic fulfillment, replacing the old cross-border models. Under 500 orders, a single central-US location works better.
Q: What’s the real cost difference in 2026?
Old Mexico (2024): $0 duties + $4-5 fulfillment + $7-10 shipping = ~$11-15/order
New US multi-node (2026): Duties paid upfront + $3-6 fulfillment + $6-9 shipping = ~$9-15/order plus import duties
You pay duties once (factored into product cost) but save on fulfillment and shipping. With Mexico’s 35% tariffs eliminated from the equation, US domestic is now the clear winner.
Q: Will any new tariff loopholes emerge in 2026?
Unlikely. The global trend is toward stricter enforcement, transparency, and domestic industry protection. Build your 2026 strategy on operational efficiency, not regulatory arbitrage.
🧩 Quick Summary for Sellers: 2026 Realities
What died in 2025:
- Mexico cross-border fulfillment model (35% apparel tariffs killed profitability)
- Section 321 duty-free import advantage (ended August 2025)
- Tariff arbitrage as a viable business strategy
Your best 2026 alternatives:
- US multi-node fulfillment (2-3 strategically located warehouses) — now the dominant model
- Amazon Multi-Channel Fulfillment (leverage existing FBA inventory across channels)
- Direct import to US + domestic 3PL (simplest, most transparent long-term approach)
The cost reality in 2026: Mexico fulfillment is now more expensive than US-based operations for most sellers due to eliminated duty-free benefits and new 35% tariffs on key categories.
The strategic shift: Stop searching for regulatory loopholes. Build competitive advantage on operational efficiency, multichannel presence, brand strength, and genuine customer value.
What to do this quarter: Get quotes from US multi-node 3PL providers (ShipBob, ShipMonk, Ryder). Compare your current all-in costs to domestic fulfillment. Most sellers will find US operations are now competitive or cheaper—without regulatory risk.
Navigating 2026 fulfillment complexity? Sellers transitioning from Mexico or optimizing domestic fulfillment strategies should focus on sustainable logistics models—multi-node US distribution networks, seamless multichannel integration, and transparent import compliance. Agencies like Luminus Hub specialize in helping Amazon sellers build resilient fulfillment operations that scale profitably in the post-Section 321 landscape.
The Mexico border strategy worked brilliantly in 2023-2024. In 2026, success belongs to sellers who’ve pivoted to genuine operational advantages over expired regulatory arbitrage.
