Mexico Slaps 50% Tariffs On India. $1 Billion Exports In Crosshairs

Four months after the US imposed 50 per cent tariffs on India for most goods, Mexico has approved levies of up to 50 per cent on the import of select products from Asian countries, including from India and China.

The tariffs that are imposed to protect the national industry and producers are set to come into effect from January 1, 2026.

Mexico has imposed duties on goods such as auto parts, light cars, clothing, plastics, steel, household appliances, toys, textiles, furniture, footwear, leather goods, paper, cardboard, motorcycles, aluminium, trailers, glass, soaps, perfumes, and cosmetics, per El Universal, a Mexican daily.

Countries that do not have a trade deal with Mexico will be impacted, like India, South Korea, China, Thailand, and Indonesia.

Why Is Mexico Imposing Tariffs?

The Mexican government is seeking to reduce reliance on imports from Asian countries, especially China, with which it has a significant trade imbalance. Meanwhile, China on Thursday said that it has "always opposed unilateral tariff hikes in all forms" and urges Mexico to "correct its wrong practices of unilateralism and protectionism at an early date."

China will be the most impacted, as Mexico imported $130 billion worth of products from the country in 2024.

The proposed tariffs are also expected to generate additional revenue of US $3.8 billion (about Rs 33,910 crore). 

Mexican President Claudia Sheinbaum also wants to provide greater protection for the country's industry and increase domestic output.

"We believe that supporting [Mexican] industry is to create jobs." Deputy Ricardo Monreal, Morena's leader in the Chamber of Deputies, said, per mexiconewsdaily.com.

However, according to Mexican economic news outlet El Financier, analysts believe the tariffs are intended to appease the US ahead of the United States-Mexico-Canada review.

How Will It Impact India?

The Mexican tariffs will affect $1 billion worth of shipments from major Indian car exporters, such as Volkswagen, Hyundai, Nissan and Maruti Suzuki, per a report by Reuters.

The import duty on cars will rise to 50% from 20%, dealing a significant blow to India's largest vehicle exporters.

"The proposed tariff hike is expected to have a direct impact on Indian automobile exports to Mexico...we seek Government of India's support to kindly engage with the Mexican government," the industry body said in its letter to the commerce ministry before the tariff was finalised.

Mexico is India's third-largest car export market after South Africa and Saudi Arabia.