Mexico City/New Delhi: Mexico has imposed new tariffs on imports from several Asian countries, a move that sharply deviates from its long-standing free-trade approach. This step makes India one of the key exporting countries that will be directly impacted.
In a major policy shift, the Mexican Senate approved a new tariff system that will increase duties on more than 1,400 products. Some of these products will face tariffs of up to 50 percent. These products are imported from countries with which Mexico does not have a formal trade agreement.
According to reports, the list of targeted countries includes China, India, South Korea, Thailand, and Indonesia. The upper house of the Mexican Senate passed the bill with 76 votes, disregarding opposition from domestic industry bodies and strong objections from China. The lower house had already approved the measure.
Notably, this decision means that starting next year and continuing until 2026, the new rates will apply to a wide range of industrial inputs and consumer goods, including automobiles and parts, textiles, apparel, plastics, metals, and footwear. While some items will face a maximum duty of 50 percent, most products are expected to fall into the 35 percent bracket.
Why is this important for India?
India, which has been trying to increase its exports of textiles, auto components, and engineering goods to Latin America, will now face significant difficulties in accessing the Mexican market. The Mexican market is the second-largest economy in the region and a crucial gateway to North America. Indian exporters have long used Mexico as a stepping stone to reach the US market, given its integration into the North American supply chain. The tariff increase threatens to disrupt those benefits. According to the report, several Mexican manufacturers dependent on imports have warned the government that higher duties on goods from India and other Asian countries will increase production costs and fuel inflation.
Impact on India
For Indian exporters, the tariff changes could reduce competitiveness in industries such as textiles, leather goods, auto parts, and steel, and could force companies to rethink their supply chain routing through Mexico.
It could also increase landed costs for Indian firms operating in or supplying to the North American value chain through Mexico. The Indian Commerce Ministry has not yet issued a statement.
The government of President Claudia Sheinbaum is believed to be signaling alignment with Washington’s tough stance on Chinese goods. This is expected to help Mexico reduce the high US tariffs imposed on its own exports, such as steel and aluminum. Although Sheinbaum has denied that the tariffs are linked to US demands, a Bloomberg report suggests that the new duty structure largely mirrors US trade actions.
The version passed this week is milder than the earlier proposal, which called for stricter duties on nearly 1,400 tariff lines. Lawmakers have now reduced the severity of tariffs on about two-thirds of those categories. Nevertheless, the Mexican Finance Ministry expects the new levies to generate approximately 52 billion pesos (₹19,000 crore) in additional revenue next year. The government says it needs this money to reduce its fiscal deficit.
Further changes ahead
The law also grants Mexico’s Economy Ministry broad authority to unilaterally change tariffs on non-FTA countries, allowing for rapid adjustments ahead of the USMCA review. This new flexibility could mean further fluctuations in the duty structure for Indian exporters. With both the US and Canada scrutinizing Chinese supply-chain routing, Mexico’s move signals a significant shift towards protectionism in North America.
