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The heat of the global trade war is intensifying, and now India has also been hit. Mexico has made a surprising decision to impose import duties of up to 50% on India, China, and several Asian countries. This move comes at a time when global supply chains are already under strain and countries are rapidly moving to safeguard their industries.
What is Mexico’s major decision?
The Mexican Senate has approved a significant increase in import duties on countries with which it does not have a free trade agreement. These include India, China, Korea, Thailand, Indonesia, and Vietnam. This decision, which will come into effect on January 1, 2026, will impose duties ranging from 35% to 50% on auto, steel, textiles, plastics, footwear, and several other sectors.
Why is Mexico doing this?
The new Mexican government argues that goods from Asian countries are causing significant damage to its domestic industries. These tariffs are necessary to protect local production, preserve jobs, and curb excessive imports. With this, Mexico expects to generate approximately $3.7 billion in additional revenue in 2026.
But the story doesn’t end there…
Experts are calling this not just an economic move, but a deeper geopolitical signal. The US has been consistently pressuring the government to restrict the flow of Asian goods. Mexico is believed to be taking this step to appease the US, improve relations ahead of the USMCA review, and mitigate potential US tariff threats. Trump has repeatedly stated that China is entering the US market through Mexico. Therefore, Mexico wants to appease the US by hurting Asian imports.
How much loss will India face?
India’s trade with Mexico is heavily in India’s favor. Approximately $5.3 billion worth of goods flow from India to Mexico each year, the largest portion of which is automobiles. Mexico’s decision to increase tariffs on cars from 20% to 50% is a major blow to Indian auto exporters, especially companies like Volkswagen, Hyundai, Maruti Suzuki, and Nissan. Additionally, several sectors such as steel, plastics, textiles, and aluminum will also be affected.
What’s next?
India may now have to seek relief from Mexico through diplomatic and trade negotiations. Companies may be forced to seek new markets and alter their export models.
