US Tariff on Clothing from Canada

Canada is the second-largest USMCA partner for clothing imports to the United States, behind Mexico. As of 2026, apparel from Canada enters the US at 0% duty — provided the goods meet the USMCA rules of origin.

Under the USMCA, clothing must satisfy the "yarn-forward" rule of origin to qualify for duty-free treatment. This means the yarn used to produce the fabric, the fabric itself, and the cutting and sewing must all occur within USMCA territory (the US, Mexico, or Canada). Limited exceptions exist for fibers on the "short supply" list — items not commercially available in North America.

Apparel from Canada that doesn't satisfy yarn-forward defaults back to the standard non-USMCA rate: 16.5% MFN base on most cotton and synthetic garments + 10% Section 122 = 26.5% effective. The most common reason for non-qualification is using fabric milled in Asia and only finishing in Canada.

Canada's apparel exports to the US concentrate in high-value technical and outerwear categories — cold-weather outerwear (Canada Goose, Arc'teryx), fleece, performance jackets, technical workwear, and specialty knits. Canadian manufacturing is particularly competitive in winter outerwear where down processing, technical fabrics, and finishing expertise carry premium value.

The cost advantage versus Asian sourcing is substantial. On a $500,000 Canada clothing shipment that qualifies for USMCA, the duty savings versus China (34%) is $170,000 and versus Vietnam (26.5%) is $132,500. Combined with shorter transit (1-3 days from Quebec or Ontario to Northeast US warehouses), Canada is increasingly competitive for premium and technical apparel programs that need fast replenishment.