Mexico's Congress and Senate have approved a plan to raise up to 50% tariffs on imported goods from countries without free trade agreements with Mexico which can directly affects India.
Starting January 1, 2026, more than 1,400 products may face increased tariffs, including:
- Automobiles and auto parts
- Textiles and clothing
- Steel and metal products
- Plastics and household goods
- Footwear and leather items
- Furniture and appliances
India isn't alone - China, South Korea, Thailand, Vietnam and Indonesia face similar duties because they also don't have a trade agreement with Mexico.
Why Mexico Took This Step?
Mexico says the tariff hike is aimed to protect domestic industries and jobs by reducing the competitive pressure from cheaper Asian imports.
Expected to generate several billion pesos in additional revenue.
Geopolitical Factors
Mexico's biggest trading partner is the United States, and the tariff move coincides with Washington's continued pressure on Latin American nations to limit deepening economic ties with China. Some analysts see Mexico's stance as partly designed to appease the U.S. ahead of the next review of the United States-Mexico-Canada Agreement (USMCA), as well as to mitigate rising U.S. trade tensions and potential threats of U.S. tariffs. The U.S. has already imposed 25% tariffs on Mexico. Trump keeps threatening to impose extra tariffs on Mexico for various reasons.
Features of Tariff Reform
- Modification to Mexico's General Import Duty.
- Higher ad-valorem duties selectively applied without FTAs.
Conclusion
Mexixo's 50% tariff on India is likely to impact the trade, which hit an all time high of $11.7 billion in 2024. India ranks as 9th destination for Mexican exports.
Presently, India has a significant trade surplus with Mexico. According to report India's export to Mexico were around $8.9 billion in 2024 as against imports of $2.8 billion, resulting in a significant trade balance in New Delhi's favour.
In 2004, Mexico's main imports from India were motor cars, auto parts and other passenger vehicles. Now, with Mexico imposing heavy duties on these items, imports may take a hit next year.
CAclubindia
