Mexico’s newly approved tariff regime marks one of the most dramatic shifts in the country’s trade policy in decades. Long known for its open-market approach and integration into North American supply chains, Mexico has now taken a sharp, protectionist turn that places steep import duties on thousands of products from non-FTA countries. This shift has caused concern across Asian exporting nations, including India, which has increasingly relied on Mexico as a strategic gateway to the US market.
Beginning next year and continuing through 2026, the tariffs will roll out across a wide range of sectors. From automobiles and automotive parts to textiles, plastics, and metals, the new policy impacts both industrial inputs and consumer goods. For India, which exports heavily to Latin America and has strengthened its presence in Mexico’s manufacturing ecosystem, these changes could significantly disrupt trade routes and increase costs.
The decision, passed by Mexico’s Senate with overwhelming support, arrives at a time when the global trade environment is already strained by geopolitical shifts, supply-chain realignments, and increasing US pressure on partner nations to restrict Chinese imports. Against this backdrop, India finds itself caught in the crossfire of evolving economic priorities and regional trade realignments.
Mexico’s Senate Approves Steep Tariffs on Asian Imports
In a major policy transition, Mexico’s Senate approved a tariff overhaul targeting import-heavy sectors that rely on goods from countries without free trade agreements. Under this new structure, duties could rise as high as 50%, affecting more than 1,400 tariff categories. The measure received 76 votes in favour, with only five senators opposed and 35 abstaining.
The countries most affected by this decision include China, India, South Korea, Thailand, and Indonesia. These nations collectively supply a wide range of intermediate and finished goods crucial to Mexico’s manufacturing and retail sectors. Despite appeals from domestic industry bodies and strong objections from China, the bill passed smoothly through both houses of Congress.
This rapid shift underscores Mexico’s intent to recalibrate its trade ties and exert greater control over foreign imports. It also signals deeper alignment with the United States’ recent protectionist measures, particularly in industries tied to strategic supply chains.
Tariffs Rolling Out Through 2026: What’s Changing?
Beginning January 2026, the tariffs will activate in phases and expand to cover industries that depend heavily on imported components. Automobiles and auto parts, textiles, apparel, plastics, metals, and footwear are among the largest categories impacted by the new regime.
While some products will face the maximum 50% duty, the majority of the listed items fall within the 35% tariff bracket. This broad sweep ensures that Mexican manufacturers relying on Asian imports will need to reassess sourcing strategies, especially those working within just-in-time production systems.
The government argues that the new tariff structure aims to strengthen Mexican industries and limit dependency on cheaper imports. However, critics warn that the move will raise production costs and potentially trigger inflation across several consumer goods categories.
Impact on India: A Strategic Trade Route Under Threat
India has steadily built its presence in the Latin American market, using Mexico as a strategic access point to the United States due to its position within the USMCA framework. Sectors such as textiles, engineering goods, auto components, pharmaceuticals, and plastics have leveraged this route to reach North American consumers.
With the new tariffs, however, India’s competitiveness in these markets faces a serious setback. Higher import costs could push Mexican manufacturers to seek alternative suppliers, and Indian exporters may need to reconsider trade routes or pivot to different regional markets.
The absence of a formal trade agreement between India and Mexico amplifies the effect of these tariffs, leaving Indian exporters more vulnerable than their competitors from countries with preferential access.
Key Challenges for Indian Exporters
The tariff hike has significant implications for Indian businesses looking to expand or sustain their presence in Mexico. Some of the critical challenges include:
- Reduced competitiveness in industries such as textiles, leather goods, steel, and automotive components due to increased final product prices.
- Higher landed costs for Indian companies operating through Mexico to access US markets.
- Disrupted supply chains as Mexican manufacturers re-evaluate sourcing decisions.
- Risk of losing market share to countries with existing free trade agreements.
These challenges may force Indian exporters to reconsider shipping routes, negotiate revised terms with buyers, or explore alternative markets within Latin America.
Geopolitical Context: US Influence on Mexico’s Trade Shift
Mexico’s sudden pivot toward protectionism did not occur in isolation. Analysts emphasize that this policy shift closely follows Washington’s increasing scrutiny of Chinese supply chains and the broader US strategy of reducing dependence on Asian imports.
With the upcoming USMCA review, Mexico appears to be signalling alignment with US economic priorities. This positioning could potentially help Mexico negotiate better terms or ease pressure from American tariffs affecting its steel, aluminium, and automotive sectors.
President Claudia Sheinbaum has maintained that the tariff hike is not directly linked to US demands, but the new rates mirror several of the United States’ recent trade restrictions, particularly those targeting China. This suggests a strategic alignment even if formally denied.
Mexico’s Domestic Debate: Mixed Reactions
Within Mexico, reactions to the tariff announcement have been divided. While some industries argue the move protects domestic manufacturing and jobs, others warn of long-term economic consequences.
Opposition senator Mario Vazquez expressed concern that while tariffs might shield certain sectors from low-cost imports, they would function as a “tax on consumers” by increasing prices. He also questioned how the government intends to utilize the additional tariff revenue.
On the other hand, Emmanuel Reyes from the ruling Morena party defended the legislation, stating that it would strengthen Mexico’s participation in global supply chains and protect vital industries from unfair competition. Local auto groups were especially supportive, arguing that the steep duty on imported Chinese cars is necessary to safeguard Mexico’s domestic automotive market.
Additional Revenue and Fiscal Implications
The Mexican finance ministry estimates that the new tariffs will generate nearly 52 billion pesos in additional revenue next year. This financial boost, equivalent to approximately ₹19,000 crore, is expected to help the government narrow its fiscal deficit and fund key policy initiatives.
The newly granted power allowing Mexico’s Economy Ministry to revise tariffs on non-FTA countries provides the government with a flexible tool to adjust to global market pressures quickly. However, this flexibility also introduces unpredictability into future tariff structures, adding another layer of uncertainty for exporters.
The evolving tariff landscape may lead to frequent adjustments, making long-term export strategies more difficult for Indian companies and others affected by the new regime.
What’s Next? A More Protectionist North America
As both the United States and Canada tighten controls on Chinese supply-chain routing, Mexico’s tariff overhaul signals a broader recalibration of North America’s economic stance. The region appears to be moving toward a more protectionist trade model, balancing domestic interests with geopolitical alliances.
For India, this shift presents both challenges and opportunities. While the immediate impact may be negative due to higher tariff barriers, the situation also encourages India to explore deeper trade partnerships, negotiate new agreements, and strengthen Asia-Latin America economic ties beyond Mexico.
Mexico’s move highlights the increasing importance of strategic trade positioning, as countries worldwide prepare for shifting supply chains, evolving global alliances, and a rapidly changing trade environment. As the new tariff regime rolls out over the next two years, its implications for India and global commerce will continue to unfold.
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About the Author:
Harshit Raj
