Mexico approves up to 50% tariffs on China, other Asian nations

MEXICO CITY – Mexican lawmakers gave final approval for new tariffs on Asian imports, broadly aligning with US efforts to tighten trade barriers against China.

Mexico’s Senate on Dec 10 voted in favour of the bill that imposes tariffs of between 5 per cent and 50 per cent on more than 1,400 products from Asian nations that don’t have a trade deal with Mexico.

The new levies will start taking effect in 2026 and hit a wide range of products from clothing to metals and auto parts, with the massive output of Chinese factories emerging as the legislation’s focus.

Passage of the bill took place against the backdrop of President Claudia Sheinbaum’s high-stakes trade talks with US President Donald Trump and pressure to match his priorities, fueling hopes Mexico’s levies on Chinese goods could ease punishing US tariffs on goods like Mexican steel and aluminum.

While Ms Sheinbaum has publicly denied any connection to Trump’s own tariff onslaught against the Asian giant, the new import levies resemble the US leader’s approach.

For decades, Mexico has embraced free trade more than nearly any other country in the Americas, inking dozens of trade deals with nations all across the globe. But Ms Sheinbaum’s leftist Morena party is now moving in a different direction.

Mexico’s finance ministry estimates the new tariffs will raise nearly 52 billion pesos (S$3.7 billion) in extra revenue in 2026.

Manufacturers reliant on inputs made in China, India and South Korea, among others, warned of rising costs that could fan inflation. Some lawmakers, including from the ruling party, sought to avoid a dispute with a rising region many consider crucial to the diversification of Mexican export markets.

Ms Sheinbaum’s embrace of the tariffs track with US concerns regarding so-called transshipment of Chinese exports through other countries, and follow action by Canada in 2024 to also emulate US levies on electric cars, steel and aluminum from China.

Chinese officials have sharply criticized the latest Mexican tariffs as unwarranted and harmful.

According to the tariff legislation, Chinese cars will face among the steepest tariffs at 50 per cent. The country’s massive auto sector currently holds 20 per cent of the Mexican market, up dramatically from minimal vehicle imports just six years ago.

Mexican officials and local auto associations backed the import levies in a bid to protect national vehicle production, a major driver of Mexico’s manufacturing sector. BLOOMBERG