The Mexican Administration has announced on Wednesday that it is more than doubling tariffs on auto parts and vehicles from several Asian countries, with Chinese imports posing the most dramatic rise.
President Claudia Sheinbaum said that the tariff rates in her administration’s budget proposal are meant to offset the impact of US tariffs on Mexican exports, especially in the automotive sector — which accounts for 23% of the country’s industry.
The proposal, which is expected to easily pass in the Mexican Congress, in which the Government party has a majority, applies to China, South Korea, India, Indonesia, Thailand and Russia.
It would raise average tariffs from 16.1% to 33.8% in several products, with some sectors — such as automotive, textiles, and steel — facing rates as high as 50%.
Automotive tariffs on imported vehicles from China was previously set at 20%.
The Economy Ministry said that these duties will impact imports worth $52 billion — which represent 8.6% of Mexico’s foreign purchases.
Moreover, Economy Secretary Marcelo Ebrard noted that they will only apply to countries that do not have free trade agreements with Mexico.
Mexico, Canada and the US have signed the United States-Mexico-Canada Agreement (USMCA) in 2020, which implemented free trade amongst the North American countries.
Now, as the United States revises country-specific tariffs on both its partners, the three are preparing to revise the agreement.
The Mexican Government is negotiating with the Trump Administration to reduce, if not eliminate, the recently launched tariffs — specifically the 25% rate on auto parts and vehicles, and the 50% duty on steel and aluminum.
The protective measures also come as Washington pressured Mexico to curb imports from China, alleging that some Chinese goods enter the US market indirectly through Mexico.
Mexico’s President had stated last week that the tariffs imposed on the Asian countries are not the result of US pressure, but rather meant to encourage local production, as products from China are usually sold below market prices.
Several Chinese automakers, like MG, BYD, JAC and Chery, are currently present in Mexico, as the US remains uncharted territory for these brands.
In August, 957,993 vehicles were sold in Mexico, from which 13.3% were General Motors‘ models, 11.3% were Volkswagen‘s, 8.4% were Toyota‘s and 3.6% were Ford‘s.
MG Motor, which said a year ago that it intends to build a factory and a R&D center in Mexico, had a market share of 3.3% last month.
Legacy automakers like Ford and General Motors depend on Mexican production and have, since April, made some changes to its production and sales, predicting the impact of the US tariffs.
GM currently builds 52% of its vehicles sold in the US at domestic facilities, while 30% come from Canada and Mexico and 18% from other regions.
Ford’s US production stands at 77%, with 21% sourced from Canada and Mexico and 2% from other regions.
The automaker raised prices on three of its Mexico-produced models in May, right after the tariffs were announced by US President Donald Trump.
