Mexico’s Congress approves tariff hikes on imports from China and others

Mexico Approves Major Tariff Hikes on Chinese Imports Amid US Trade Tensions

Mexico’s Congress has approved substantial tariff increases on more than 1,400 imported products, primarily targeting goods from China and other nations without free trade agreements with Mexico. The Senate passed the measure Wednesday evening with 76 votes in favor, five against and 35 abstentions, following approval by the lower chamber earlier that day.

The legislation, backed by President Claudia Sheinbaum’s governing Morena party which controls both houses of Congress, will impose tariff hikes of up to 50% on various goods including textiles, footwear, appliances, vehicles and auto parts. These increases are set to take effect in January.

While Sheinbaum has publicly stated that the tariffs are necessary to stimulate domestic production, economic analysts point to a different motivation. Many experts believe the real driver behind these trade measures is Mexico’s complex relationship with its largest trading partner, the United States, and ongoing negotiations to address tariffs imposed during the previous Trump administration.

“The real reason has to do with the United States, it has to do with the review of the USMCA that is coming up, with the negotiations to obtain reductions, exemptions from the tariffs that Mexico is facing at this moment to access the U.S. market,” explained Oscar Ocampo, director of economic development at the Mexican Institute for Competitiveness.

Mexico currently faces U.S. tariffs on its automotive sector, steel, and aluminum exports – key industries for the Mexican economy. By imposing its own restrictions on Chinese imports, the Mexican government appears to be responding to Washington’s concerns that China uses Mexico as a backdoor into the American market.

The impact of these tariffs could be significant for global trade patterns. China, which sold approximately $130 billion worth of goods to Mexico in 2024 – making it Mexico’s second-largest source of imports after the United States – has already expressed criticism of the proposed increases when they were announced in September.

The Chinese government’s reaction highlights the delicate balancing act Mexico faces as it navigates relationships with the world’s two largest economies. While attempting to appease U.S. concerns, Mexico risks damaging its growing economic ties with China, which has become an increasingly important trading partner and source of investment.

However, critics like Ocampo argue that Mexico is making a strategic error by altering its commercial policy “in the wrong direction” to accommodate what he describes as an unpredictable U.S. administration. He warns that the tariffs could create significant disruptions across multiple industrial sectors in Mexico, including auto parts, plastics, chemicals, and textiles.

These disruptions could manifest as supply chain complications and increased costs for Mexican manufacturers who rely on imported components. Additionally, the tariff hikes may contribute to inflation at a time when Mexico’s economy is already experiencing a slowdown, potentially creating a double challenge for Sheinbaum’s administration.

The timing of these tariff increases is particularly significant as they come during a period of global economic uncertainty and ongoing trade tensions between major powers. Mexico’s position as a key manufacturing hub with access to North American markets makes its trade policies particularly consequential for regional economic integration.

As January approaches, businesses across multiple sectors are now preparing for the impact of these new tariffs, which could reshape supply chains and trade patterns throughout North America. The Mexican government’s gamble on using tariffs as leverage in its relationship with the United States will be closely watched by economists, trade experts, and businesses in the coming months.