An old conflict has flared between yarn producers and clothing manufacturers in Colombia. The government of Gustavo Petro will eliminate a 10% tariff on raw materials to benefit those who turn them into apparel. “If Colombian garment manufacturers can reduce financial, energy, and input costs, they could become one of Colombia’s major exporters,” the president said a few weeks ago.
Clothing makers, concerned about growing competition from foreign retailers like Shein and Temu, have welcomed the decision: for years, they have pointed out that they must import 95% of their materials due to the crisis among local yarn producers. Raw material producers, on the other hand, are desperate. To them, the government’s imminent decree represents a definitive blow.
Petro’s announcement came in response to an “urgent appeal” made on October 11 by Guillermo Criado, president of the Colombian Garment Chamber. The industry leader wrote on X that tariffs on yarn “perpetuate competitive lag and sacrifice thousands of jobs” in his sector. “The government faces a crucial decision for reindustrialization: favor 142,000 small businesses that account for 99% of employment in the fashion sector, or protect two [yarn production] companies?” he argued.
According to Criado, removing the tariff is “an urgent decision” to lower costs and compete with Chinese companies Shein, Temu, and AliExpress. These platforms, which arrived last year and are growing rapidly, allow consumers to order inexpensive clothing from abroad.
Yarn workers’ unions responded that the measure will wipe out the six remaining national factories — Colombia once had more than 30 — and cost 8,000 jobs. “It’s a death sentence,” said Sintratextil in a statement supported by the United Workers’ Union (CUT). According to the organization, yarn accounts for just 1% of the cost of a garment, and removing the tariff will not solve the “structural problems” plaguing clothing manufacturers: smuggling, tax evasion by foreign platforms, and high transportation and energy costs.
A faction of the General Confederation of Labor union (CGT) also criticized the measure, arguing that it benefits Asian industries that fail to meet “basic labor protection standards.” They accused clothing manufacturers of causing the crisis in Colombian yarn factories: “They overwhelmingly opted for Asian suppliers due to artificially low prices.”
Cotton growers are also concerned. They once cultivated 300,000 hectares in the last century, but today that number has dropped to about 10,000. “If the yarn factories we sell to close, our only option would be exports,” explained César Pardo, president of the Colombian Cotton Confederation, over the phone.
In reality, that option is unviable: customs and transportation costs raise the price by up to 10 cents per pound — unthinkable when the international cotton price is low, around 64 cents compared with the 75 cents Pardo estimates is needed. “Clothing manufacturers should look at other costs, such as taxes, utilities, and labor. We support them in continuing production, but one link in the chain cannot destroy the others,” he added.
Colombia’s Ministry of Industry and Commerce, which is still reviewing the decree, remains firm. “Domestic yarn consumption reaches about 163,000 tons annually, of which only around 12% is supplied by national production. Given this high dependence [on imports], it is not possible to maintain the tariff,” the ministry explained in a response to industry groups commenting on the draft decree. “Cotton producers can access other support programs,” it added.
However, the ministry dismissed a request from clothing manufacturers to investigate “possible price-fixing agreements” among yarn producers, — a request that highlights tensions between the sectors. “Technical visits have already been carried out, and no anti-competitive behavior was found,” the ministry replied.
The garment manufacturers’ tariff
Colombian clothing manufacturers have their own import tariff: 40%, the maximum allowed by the World Trade Organization (WTO). It had been 22% until a few years ago, limited to small and medium producers, but the Petro administration raised and expanded it in December 2022. “This is not only one of the president’s promises, which we are fulfilling, but also a boost to employment and productivity in the national garment industry,” explained then‑commerce minister Germán Umaña.
Industry leader Guillermo Criado argues that there is no contradiction between defending this tax and criticizing the yarn tariff as “anachronistic protectionism.” “They are the raw material. And this is a chain in which we contribute 99% of the employment and economic growth,” he said in a phone interview.
Inexmoda, an institute that promotes internationalization of the sector, provides less emphatic employment figures but still shows a notable difference: it estimates that the industry generates 1.4 million jobs — including indirect employment — 83% of which are in garment manufacturing.
Criado believes the 40% tariff is not enough given the arrival of online platforms in 2024, which can bypass the tax on purchases under $200 and are exempt from VAT — the government has proposed changing this in a tax reform, but it has not yet passed Congress. “They are taking an increasingly large share. Nowadays, 400,000 kilograms enter daily without paying anything or creating jobs,” the industry leader said, adding that total garment imports are growing at “double-digit rates.” He acknowledges that eliminating the yarn tariff will not solve the underlying problem: “It’s a step. We must continue to stop these digital platforms through other measures; one action does not exclude the other.”
Data from Inexmoda’s latest sector report show that garment sales experienced a sharp decline two years ago, before the arrival of the platforms, and are now showing a slight recovery: -7.7% in 2023, -5.3% in 2024, and 3.8% in the first eight months of this year. “The garment industry shows strong signs of recovery and growth,” the report stated. Yarn and fabric sales, by contrast, have yet to improve: -15.9% in 2023, -1.1% in 2024, and -0.8% between January and August 2025. “This year has seen weaker demand, in addition to pressures in the domestic market and competition from imported products.”
Political dispute
The political struggle is evident. Criado notes that yarn producers have the backing of the National Business Association (ANDI) and through that influence, “no measures were allowed under previous governments.”
José Manuel Restrepo, rector of the EIA University and former commerce and finance minister under Iván Duque (2018–2022), offers a different perspective: he says yarn producers are “overpowered” by clothing manufacturers, who still have “a great deal of influence” among politicians. “When I was minister, Congress tried to impose that 40% tariff in the National Development Plan, and it passed with support ranging from the Historic Pact [Petro’s party] to the Democratic Center [Uribe’s party]. We challenged it and it was overturned,” he recalled.
Meanwhile, anxiety is rising among yarn workers. Laborer and union member Luis Rodrigo Carmona says over the phone that he has met with officials from the Ministries of Labor and Agriculture, who supported him but warned that the final decision rests with the president. Carmona feels a closure is imminent and, after four decades in cotton spinning, fears for his future. “I don’t know how to do anything else. And are the clothing manufacturers going to hire me if I lose my job?”
He recalls that the image of his sector was very different in 1987, when he joined the Fabricato factory in Bello at age 18. “We were like a river of people: 15,000 workers. Now we are 1,200 and facing extinction,” he says.
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