Mexico and India may soon step up trade negotiations following the approval of steep new tariffs by both chambers of the Mexican Congress, which could disproportionately affect India.
These tariffs, designed to bolster Mexican manufacturing and address trade imbalances, target countries that do not have free trade agreements with Mexico, including China, South Korea, Thailand, and Indonesia, in addition to India.
Despite facing criticism from business groups, Mexico’s government anticipates that the tariffs will strengthen domestic industry and safeguard jobs.
The measures, which could reach up to 50%, are reportedly intended to appease the United States ahead of the 2026 review of the regional trade pact, USMCA, Mexico News Daily reports.
“Such steep duties will erode our competitiveness and risk disrupting supply chains that have taken years to develop,” the Federation of Indian Export Organisations’ Director General Ajay Sahai stated.
The increased tariffs are set to come into effect on 1st January 2026.
In response, India is advocating for a free trade agreement to prevent roughly $2 billion of its exports from being hit by the new tariffs, India’s Trade Secretary Rajesh Agrawal said on Monday.
“Mexico’s primary target is not to hit Indian exports. India has engaged with Mexico to pursue a trade agreement to mitigate the impact promptly,” Agrawal stated.
India’s Trade Secretary added that Mexico and India have held preliminary technical talks on a potential free trade agreement, following an online meeting this month between him and Mexico’s Deputy Minister Luis Rosendo.
In 2024, India exported $5.73 billion worth of goods to Mexico, while Mexico’s exports to India totalled $3.01 billion, with key items including vehicles, base metals, auto parts, and textiles.
Mexico’s new tariffs are likely to hit India’s auto sector particularly hard, which exports about $1 billion in vehicles to Mexico annually. The import duty on cars is expected to rise from 20% to 50%.
Last month, the Society of Indian Automobile Manufacturers urged India’s Commerce Ministry to press Mexico to “maintain status quo” on tariffs for vehicles exported from India to Mexico, India’s third-largest car export market, according to a letter reviewed by Reuters news agency.
“Indian-origin vehicles are not a threat to Mexican local industry as Indian vehicles do not cater to high-end segments manufactured by Mexico for serving the North American market,” the industry group said.