On the 10th, Mexico’s Chamber of Deputies passed a controversial bill recommending the imposition of import tariffs of up to 50% beginning next year on China and other Asian countries with which Mexico has not signed a free trade agreement, including India, South Korea, Thailand, and Indonesia. Analysts view this as Mexico’s attempt to align with U.S. trade policy in response to the upcoming review of the United States-Mexico-Canada Agreement (USMCA).
● Automotive and Textile Industries First to Bear the Brunt
Foreign media reported that the bill passed in the Chamber of Deputies with 281 votes in favor, 24 against, and 149 abstentions. The legislation is intended to boost domestic production and address Mexico’s severe trade deficit by imposing tariffs on products such as automobiles, auto parts, textiles, apparel, plastics, and steel. Most tariff rates for these goods are set at 35%.
The bill was initially proposed in September and will next be sent to the Senate for a vote. It will only be officially implemented once approved by the Senate.
● Analysts Say Move Is To Please U.S. and Avoid Becoming an 'Export Hub'
Analysts believe that Mexico's push to levy tariffs on Asian countries at this time is mainly aimed at meeting U.S. demands and preparing for the forthcoming USMCA review. Last Thursday, U.S. Trade Representative Katherine Tai publicly stated that Canada and Mexico should not serve as an "export hub" for China and other Asian countries, implying that these North American free trade partners must take measures to restrict Asian goods from entering the U.S. market via their borders.
China has long been Mexico’s largest source of trade deficit. After implementing the new tariffs, the cost for China and other named Asian countries to export products to Mexico will rise substantially, encouraging Mexican companies to source locally or from within North America.
● Strong Opposition from China and Mexican Business Community
Although the bill passed the Chamber of Deputies, it faced strong opposition from both China and Mexican business groups before the vote.
The Chinese Ministry of Commerce previously issued a statement pointing out that, given the current context in which the U.S. routinely abuses tariffs, all countries should jointly oppose all forms of unilateralism and protectionism. China emphasized that no country should "sacrifice the interests of a third party due to coercion by others." Mexican business groups are concerned that the tariffs could drive up domestic production costs and harm Mexico’s position in the global supply chain.