Imagine shipping your products to Mexico, anticipating substantial profits, only to be hit with unexpected tariff increases that could erase your margins or even lead to losses. This scenario may soon become reality as Mexico's Chamber of Deputies recently passed new legislation targeting imports from China and other Asian countries, with significant tariff hikes set to take effect next year.
What's Changing?
The proposed policy would impose additional tariffs ranging from 10% to 50% on 1,463 product categories originating from China, India, Vietnam and other nations. While the maximum rate reaches 50%, most products are expected to face approximately 35% tariffs. For industries operating with already narrow profit margins, these increases could prove devastating.
Affected Industries
The broad-reaching tariff adjustments impact 17 sectors including:
- Automobiles and auto parts (with light vehicles potentially facing the maximum 50% rate)
- Textiles and apparel
- Plastic products
- Steel
- Home appliances
- Toys
Mexico's Rationale
Government officials cite multiple reasons for the policy shift:
- Domestic industry protection: Higher import prices aim to strengthen Mexican manufacturing and reduce foreign dependence
- Trade deficit reduction: Mexico's trade imbalance with China reached $68.58 billion in just the first seven months of 2025
- Revenue generation: Projected to add approximately $3.76 billion annually to government coffers
- USMCA alignment: Preventing Chinese goods from circumventing US tariffs by transshipping through Mexico
Impact on Chinese Businesses
As Mexico's second-largest import source (accounting for nearly 20% of total imports) with $90.23 billion in exports during 2024, Chinese companies face significant challenges. Potential adaptation strategies include:
- Local production: Establishing Mexican manufacturing facilities to bypass tariffs
- Supply chain restructuring: Identifying alternative production bases or diversifying product offerings
- Value enhancement: Investing in innovation and branding to maintain competitiveness despite higher costs
The new tariff regime promises to substantially reshape trade dynamics between Mexico and its Asian partners. Businesses engaged in affected sectors must closely monitor policy developments and implement strategic adjustments to navigate the changing commercial landscape.