Tariffs

Mexico has delivered a major blow to several Asian economies including India with its decision to impose tariffs of up to 50% on a wide range of imported goods. The new duties, set to take effect on January 1, 2026, place nearly $1 billion in Indian exports at direct risk.

The move comes just months after the United States levied similar tariffs, signalling a tightening trade environment aimed largely at reducing dependence on Asian manufacturing hubs.

What Triggered Mexico’s Tariff Push?

The Mexican government has stated that the primary goal is to protect domestic industry and reduce over-reliance on imports, particularly from China. Mexico runs a massive trade deficit with China, importing close to $130 billion worth of goods in 2024 alone.

By raising import taxes, Mexico aims to bolster local production capacity, generate additional revenue estimated at $3.8 billion and safeguard jobs in sectors increasingly pressured by cheaper imports.

Mexican officials, including President Claudia Sheinbaum’s administration, argue that stronger domestic industry is critical for long-term economic stability. Some analysts, however, believe the move also aligns with US expectations ahead of the United States-Mexico-Canada (USMCA) trade pact review.

Wide-Ranging Products Under The 50% Tariff Net

The new tariff list covers an extensive range of goods central to Asian export economies. The affected items include:

• Auto components and light vehicles
• Steel and aluminium products
• Plastics and household appliances
• Clothing, textiles, footwear and leather goods
• Furniture, toys and paper products
• Cosmetics, soaps, perfumes
• Glassware, motorcycles and trailers

India, China, South Korea, Thailand, and Indonesia countries without free trade agreements with Mexico will bear the brunt of these restrictive measures.

India Among The Hardest Hit

For India, the tariff hike is particularly significant. Mexico is the country’s third-largest passenger vehicle export market, trailing only South Africa and Saudi Arabia.

With Mexico raising import duty on automobiles from 20% to 50%, Indian automakers face a formidable challenge. Brands with major export operations such as Maruti Suzuki, Hyundai, Nissan and Volkswagen (India) will now see steep cost escalations, threatening their competitiveness.

Industry bodies have already reached out to the Indian government, urging diplomatic engagement with Mexico to safeguard crucial export lines. Without intervention, companies could face drastic sales drops, supply restructuring, or diversion of exports to less profitable markets.

A Ripple Effect Beyond Cars

While vehicles form the biggest share of India’s exposure, the new tariffs also hit multiple categories of industrial goods and consumer products. Sectors such as plastics, textiles, small appliances, cosmetics and paper products may face slower demand and reduced margins in one of Latin America’s most important markets.

For India which is actively expanding its global trade relationships the sudden tariff surge represents a strategic setback that may require renegotiations or realignment of export strategies.

A Shift In Global Trade Winds

Mexico’s tariff regime highlights a broader trend: countries are beginning to reconfigure supply chains, tighten import dependence, and respond to geopolitical pressures often from the United States.

For India, this marks not only a commercial challenge but also a reminder of the evolving trade landscape where traditional market access can no longer be taken for granted.