Mexico is set to implement significant tariff increases on imports from China, India, and other Asian nations, with rates potentially reaching 50%. This decision comes after the Mexican Senate passed a bill on Wednesday with 76 votes in favor, five against, and 35 abstentions. The move aims to protect domestic manufacturers and bolster local industries.
The approved tariffs will primarily affect countries without existing trade agreements with Mexico, including China, India, South Korea, Thailand, and Indonesia. Starting in 2026, a wide array of products will face increased duties. These include goods across approximately 1,400 tariff lines, encompassing sectors such as vehicles, auto components, textiles, garments, plastics, and steel. While some items may see tariffs as high as 50%, the majority will be capped at 35%.
This legislative action follows months of debate and has drawn objections from both global trading partners and local business groups. China has formally expressed its concerns regarding the new tariffs. Some analysts suggest that Mexico's decision is intended to align with the United States ahead of the upcoming review of the United States-Mexico-Canada trade agreement (USMCA). It is also seen as a strategy to increase government revenue by an estimated $3.76 billion in the coming year, helping to reduce Mexico's fiscal deficit.
Senator Mario Vazquez of the opposition PAN party acknowledged the dual nature of the policy, stating that it could safeguard local industries and jobs while also functioning as an additional tax on consumers. Senator Emmanuel Reyes from the ruling Morena party defended the measure, asserting that it would promote Mexican products.
India and Mexico have cultivated a robust trade relationship, with bilateral trade in goods exceeding $10 billion and reaching a record high of $11.7 billion in 2024. India maintains a significant trade surplus with Mexico, exporting approximately $8.9 billion worth of goods compared to imports of $2.8 billion in 2024. Mexico is currently India's second-largest trading partner in Latin America, after Brazil.
The approved bill is a modified version of an earlier proposal that encountered resistance in the lower house. Compared to the original draft, the final legislation reduces duties on roughly two-thirds of the items. Despite these adjustments, concerns remain among industry groups that the higher tariffs could increase production costs, disrupt supply chains, and diminish overall competitiveness.
