Mexico’s High Tariffs Could Slow India’s Rising Auto Exports
Mexico imposed a tariff of up to 50 percent on imports from its non-preferential trade partners, including India, a move that might hit New Delhi’s annual $5.75 billion shipments to its third-largest car export market.
The escalation by the North American country comes at a time when Indian exporters are already grappling with a 50 percent tariff imposed by the US, which has severely impacted labour-intensive sectors. The tariffs range between 5 percent and 50 per cent on more than 1,400 products from Asian countries, such as India, China and Thailand that do not have a trade deal with Mexico.
The duties are set to kick in from January 1, 2026, and will apply to electronics, apparels, chemicals, a large number of engineering goods, which includes automobiles, metals, among others. The move is aimed at protecting Mexico’s domestic industry.
The government and the Indian exporters are closely watching the development and waiting for the formal notification by the Mexican government.
This is because there have been discussions in the US about Chinese goods being rerouted into the American market through Mexico.
“This has come at the wrong time. The industry is still under shock. We are still struggling with the tariffs imposed by the US, and now Mexico will also raise tariffs on India. The industry wanted a trade deal with Mexico and if that happens we may get relief from the duties,” says Ajay Sahai, director-general and chief executive officer of Federation of Indian Export Organizations (FIEO).
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Mexico accounted for 1.3 percent of India’s total merchandise exports at $5.75 billion in 2024-25. However, a close look at the data showed that engineering goods dominate the basket, making up 61 per cent ($3.5 billion) of the exports of India’s outbound shipments to the Latin American nation.
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Auto mobiles and auto components make up nearly one-third of exports to Mexico, and the tariff increase is likely to affect $1 billion worth of shipments from Indian carmakers, including Maruti Suzuki India, Volkswagen Group, Hyundai Motor India, and Nissan.
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For passenger vehicles, the import duty is set to rise from 20 to 50 percent. Carmakers have already begun re-evaluating their export strategies for Mexico.