Mexico slaps 50% tariffs on Asian imports, may hit Indian auto sector

Mexico has introduced sweeping tariffs of up to 50% on imports from India, China and several other Asian economies, marking one of its most significant trade policy overhauls in recent years. The decision, approved by both houses of Congress, is expected to reshape trade flows from 1 January 2026 and alter Mexico’s role in global supply networks. The tariff package covers more than 1,400 products. These include automobiles, auto components, textiles, clothing, plastics, steel, household appliances and electronics. India, which lacks a free trade agreement with Mexico, faces immediate exposure across industrial and consumer goods categories.

Mexico President Claudia Sheinbaum's government said the move is to protect local employment and manufacturing. The Mexican government has justified the move as essential for supporting domestic industries and curbing dependence on low-cost imports. Authorities argue that rising inflows, particularly from China, have contributed to widening trade imbalances and pressured local producers across several manufacturing clusters. The reform is expected to generate about $3.76 billion in additional revenue.

The tariff on Asian imports is expected to hit the Indian automakers the most as Mexico, is India's third-largest car export market after South Africa and Saudi Arabia. Companies such as Volkswagen, Hyundai and Maruti Suzuki, whose exports added up to around $1.1 billion in 2024-25, shipments of around 90,000 units may be hit. Besides, component exports to Mexico were estimated at around $850 million in 2024-25 and some of these were used by companies to manufacture vehicles headed to the US.

According to experts, Washington has been urging Mexico to restrict Asian goods allegedly using Mexico as a staging point to bypass US tariffs. The tariff decision comes ahead of the scheduled review of the US–Mexico–Canada Agreement, where supply-chain integrity and circumvention issues are expected to feature prominently. While higher taxes will yield around $2.8 billion revenue for the Mexican govt, it is seen to have facing US President Donald Trump's pressure on Mexican President Claudia Sheinbaum to reduce imports from China.