Mexico on Thursday imposed a tariff of up to 50 per cent on imports from its non-preferential trade partners, including India, a move that might hit New Delhi’s annual $5.75 billion shipments to its third-largest car export market.
The escalation by the North American country comes at a time when Indian exporters are already grappling with a 50 per cent tariff imposed by the US, which has severely impacted labour-intensive sectors.
The tariffs range between 5 per cent and 50 per cent on more than 1,400 products from Asian countries, such as India, China and Thailand that do not have a trade deal with Mexico.
The duties are set to kick in from January 1, 2026, and will apply to electronics, apparels, chemicals, a large number of engineering goods, which includes automobiles, metals, among others.
The move is aimed at protecting Mexico’s domestic industry.
The government and the Indian exporters are closely watching the development and waiting for the formal notification by the Mexican government.
They said they were trying to understand if the move is primarily targeted at China.
This is because there have been discussions in the US about Chinese goods being rerouted into the American market through Mexico.
“This has come at the wrong time.
"The industry is still under shock. We are still struggling with the tariffs imposed by the US, and now Mexico will also raise tariffs on India.
"The industry wanted a trade deal with Mexico and if that happens we may get relief from the duties,” said Ajay Sahai, director-general and chief executive officer of Federation of Indian Export Organisations (FIEO).
Mexico accounted for 1.3 per cent of India’s total merchandise exports at $5.75 billion in 2024-25.
However, a close look at the data showed that engineering goods dominate the basket, making up 61 per cent ($3.5 billion) of the exports of India’s outbound shipments to the Latin American nation.
Automobiles and auto components make up nearly one-third of exports to Mexico, and the tariff increase is likely to affect $1 billion worth of shipments from Indian carmakers, including Maruti Suzuki India, Volkswagen Group, Hyundai Motor India, and Nissan.
For passenger vehicles, the import duty is set to rise from 20 per cent to 50 per cent.
Carmakers have already begun re-evaluating their export strategies for Mexico.
A leading car exporter from India, on condition of anonymity, said: “We have a substantial amount of exports to Mexico from India.
"However, being a multinational, we have ways to overcome such a crisis by diversifying the Mexico export quantity to some other country in which we are having a production facility,” said a source from one of the multinational automobile majors hit by the move.
Mexico is India’s third-largest car export market after South Africa and Saudi Arabia. Maruti Suzuki India and Hyundai Motor India did not comment.
According to Reuters, the Society of Indian Automobile Manufacturers (Siam) had urged the commerce ministry in November to press Mexico to “maintain status quo” on tariffs for vehicles shipped from India, according to a copy of the letter.
“Skoda Auto accounts for nearly 50 per cent of India's total car shipments to Mexico.
"Hyundai shipped cars worth $200 million, Nissan’s exports stood at $140 million and Suzuki's at $120 million, the data showed,” Reuters noted.
Majority of shipments from India to Mexico are compact cars with an engine size of less than one litre.
Of the 1.5 million passenger vehicles sold in Mexico each year, about two-thirds are imported and India's shipments make up "just about 6.7 per cent" of the total sales.
With inputs from agencies
