Mexico to Raise Tariffs on Autos from China in Major Trade Overhaul

• Mexico announced on Wednesday that it will raise tariffs on automobiles from China and several other Asian countries to 50%, as part of a broader revision of import duties aimed at protecting domestic industries.
• According to the Economy Ministry, the new tariff measures will affect approximately $52 Bn of imports across multiple sectors, including textiles, steel, and automotive. Import duties on Chinese cars, which currently stand at 20%, will be increased to the maximum level permitted under World Trade Organisation (WTO) rules.
• Economy Minister Marcelo Ebrard said the measures were designed to support local employment, noting that Chinese vehicles were entering the domestic market below reference prices. The government expects the tariffs to protect an estimated 325,000 industrial and manufacturing jobs at risk.
• The policy, which still requires congressional approval, will apply to countries without free trade agreements with Mexico. This includes China, South Korea, India, Indonesia, Russia, Thailand, and Turkey.
• Beyond automobiles, the measures include a 35% tariff on steel, toys, and motorcycles, while textiles will see tariffs ranging between 10% and 50%. In total, the new duties are projected to affect 8.6% of Mexico’s total imports.
• The tariff plan is also expected to raise an additional $3.76 Bn in revenue next year, according to government estimates.
• Analysts noted that the decision comes amid growing trade tensions between the U.S. and China, with Mexico navigating its position as a key U.S. trade partner. Mexico has nearly doubled its trade deficit with China over the past decade, reaching $120 Bn in 2023. Some analysts suggested that aligning import policies with U.S. interests could reduce potential trade frictions, given the upcoming review of the U.S.-Mexico-Canada Agreement (USMCA) scheduled for next year.

(Source: Reuters)