【By Observer Net, Ruan Jiaqi】

According to reports from Bloomberg and Reuters on the 10th, the Mexican government plans to increase tariffs on key imported goods from countries that have not signed trade agreements with it, in an effort to boost domestic industries and reduce reliance on imports from Asia.

Analysts pointed out that in this adjustment, the tariff rate on imported cars will be raised to as high as 50%, directly affecting China, which is the largest source of car imports for Mexico. Currently, the import tariff on light vehicles from China to Mexico ranges from 15% to 20%.

Data from the China Passenger Car Association shows that Mexico has replaced Russia as China's largest export market for automobiles. In the first half of this year, the volume of Chinese auto exports to Mexico increased by nearly 25% compared to the same period last year. In addition to Chinese domestic automakers such as BYD, U.S. "big two" General Motors and Ford, as well as the world's fourth-largest automotive group Stellantis, also export vehicles produced in China to Mexico and other Latin American regions.

Reuters cited analysis stating that Mexico's tax increase is seen as a response to pressure from the United States, aiming to appease the Trump administration's trade threats. The latter has recently continuously urged Mexico to follow the U.S. example and impose tariffs on Chinese imports.

Gabriela Siller, chief economist and head of economic analysis at the Mexican financial group Banco Base, stated on social media that the tax increase on "countries without trade agreements" essentially has two core objectives: "one is to increase fiscal revenue, and the second is to please Trump."

She pointed out that Chinese cars will be the most affected imported products under this tariff adjustment. A proposed 50% tariff is far higher than the current rate and is also the upper limit allowed by World Trade Organization (WTO) rules, indicating the priority of U.S. concerns in Mexico's policy.

Siller commented, "This is a typical Trump-style protectionist measure, whose intention seems to be building a common front against China. Given that the USMCA (United States-Mexico-Canada Agreement) is about to be reviewed (in 2026), such measures are not surprising."

She also warned that although these measures may bring some tax growth and please Trump, they could also push up domestic commodity prices in Mexico.

"Clearly, any policy has costs; the cost of this tariff will be higher commodity costs and greater inflationary pressure," Siller said.

She also added that in the short term, this tariff plan might actually stimulate demand for Chinese cars in the Mexican market.

On September 4, she answered questions from reporters regarding the tariff measures. The website of the Mexican Presidential Office

Guillermo Rosales, executive chairman of the Mexican Automobile Dealers Association, also issued a warning when interviewed by Bloomberg, fearing that the tax hike could directly raise car prices in Mexico.

"This government decision will bring a major shift in car trade," he explained, "once existing inventory is sold out, car prices will inevitably rise, leading to limited domestic market competition and a significant reduction in consumer choice."

The new energy vehicle sector is also not immune to the impact. He said, "The purchase cost of plug-in hybrid vehicles, hybrid electric vehicles, and pure electric vehicles will also increase due to the tariff hike."

More importantly, the prior investments of local distribution companies in Mexico will also be affected. Rosales revealed that these companies have established over 800 sales outlets for Chinese car brands, with investment exceeding 60 billion Mexican pesos (approximately 3.2 billion USD), directly creating more than 32,000 jobs.

Bloomberg's report also states that the large scale of trade between China and Mexico means that other industries may also face similar risks.

China is Mexico's second-largest trading partner globally, and Mexico is China's second-largest trading partner in Latin America. Data show that the total trade volume between China and Mexico reached 109.426 billion USD in 2024, with China's exports to Mexico amounting to 90.232 billion USD and imports totaling 19.195 billion USD. China mainly exports electronic components, kitchenware, and automotive parts to Mexico, while importing crude oil, electrical equipment, and medical instruments from Mexico.

On August 28, Guo Jiakun, spokesperson for the Ministry of Foreign Affairs, responded to related questions, pointing out that Mexico is China's second-largest trading partner in Latin America, and China is Mexico's third-largest export destination country. Win-win cooperation is the essential feature of Sino-Mexican economic and trade cooperation. China has always advocated for inclusive and open economic globalization and opposes all forms of unilateralism, protectionism, and discriminatory and exclusionary measures.

Guo Jiakun emphasized that China firmly opposes imposing restrictions on China under others' coercion, damaging China's legitimate rights and interests. It is believed that relevant countries will adhere to independence and handle related issues properly.

On May 14, the launch event for BYD's first pickup truck product was held in Mexico City. Visual China

Opposition to Tariffs: Mexican Minister Reverses Position: Protecting the Automotive Industry Is Crucial

According to reports from the UK's Financial Times and others, this week, the Mexican government submitted the draft of the 2026 federal budget bill to Congress, with the proposed tariff list included in it.

According to Marcelo Ebrard, the Mexican Minister of Economy, the tariff list will cover more than 1,400 product categories, involving import value of approximately 52 billion USD, applicable to all countries that have not signed trade agreements with Mexico.

Mexico has signed trade agreements with over 50 countries, including the United States, Canada, the European Union, Japan, Malaysia, Vietnam, and Singapore.

Among the non-signatory countries, China is the largest source of imports for Mexico, followed by South Korea, India, and Russia. Additionally, Thailand, Indonesia, and Turkey will also be affected by this tariff adjustment.

According to the bill published by the Mexican Ministry of Economy on the 10th, the purpose of this tariff adjustment includes "protecting domestic industries in strategic areas, replacing Asian imports with local production," as well as "improving Mexico's trade balance."

The text of the bill states that the new tariff plan will focus on protecting 19 industrial sectors considered "strategic," affecting 8.6% of Mexico's imports, potentially protecting 325,000 industrial and manufacturing jobs at risk in strategic industries, and also creating thousands of new employment opportunities.

The newly imposed import tariffs will also affect products such as automotive parts, steel, toys, furniture, textiles, home appliances, and footwear, with rates set between 10% and 50% depending on the category.

Minister of Economy Marcelo Ebrard had previously opposed the tariff measures, believing that such policies "are not conducive to economic growth and would hinder efforts to curb inflation." However, on Wednesday, he defended the new tariffs, saying, "These goods already had tariffs, and we are simply raising the rates to the WTO-allowed maximum level."

During an event in the State of Mexico, when talking about car tariffs, Ebrard also stated that protecting the automotive industry is crucial for Mexico, "the automotive industry accounts for 23% of the national manufacturing sector, so we must protect this area. One way to do that is to increase the tariffs on low-priced imported light vehicles, which arrive in Mexico at prices below our set reference price."

"The core purpose of adjusting tariffs is to protect employment," he added, "in the current competitive environment, without a certain degree of protection, you can hardly participate in the competition."

Although Mexican officials insist that the main goal of the tax increase is to support domestic industries, Mexican Finance Minister Edgar Amador admitted that these measures "are being implemented within the framework of trade negotiations and future discussions with North American partners."

He claimed that the core of the policy is "strengthening local production and consumption," and re-industrializing industries that have lost competitiveness due to unfair competition from other countries. He added, "I don't think only we are doing this."

AP reported that Amador did not specifically mention China during the interview, but stated that the new tariff adjustments will affect "all countries that do not have trade agreements with Mexico."

He also emphasized that the tariff measures comply with WTO guidelines and the government will closely monitor any potential impacts on production or prices caused by the policy.

The tariff proposal still needs approval from the Mexican Congress. However, given that President Sheinbaum's party and its allies have a clear advantage in both the Senate and the House of Representatives, it is widely believed that the bill is likely to pass. Minister of Economy Ebrard stated that the tariffs will come into effect 30 days after being published in the official Mexican gazette.

Alfonso Ramírez Cuéllar, a member of the Budget Committee of the Mexican Chamber of Deputies, told Bloomberg that at this stage, lawmakers are assessing the proposed tariffs on various products, and the next step will be to submit them to the relevant committees of Congress for further discussion.

In a phone interview, he mentioned that Mexico has already imposed tariffs on textiles, shoes, and small imports from e-commerce platforms such as Shein and Temu. He believes that the new tariff plan will "strengthen North American trade relations" during negotiations with the Trump administration.

Juan Carlos Baker, former Deputy Minister of Economy of Mexico, expressed his concern. On Wednesday, he said on a local radio program that this tariff is a "significant jump" from the current level, signaling that the focus of Mexico's trade policy may no longer be providing manufacturers with competitively priced raw materials. In the long term, it could affect Mexico's competitiveness in the global supply chain.

The Mexican authorities have urged domestic companies to use more local suppliers, but industry analysts warn that supply chain transformation is difficult to achieve quickly.

Diego Marroquin, a researcher at the Washington-based think tank Center for Strategic and International Studies (CSIS), said, "Ideally, the first step should be to ensure sufficient funding and industrial capacity to expand the production of related products. This process requires several years and cannot be completed in a few months."

This article is an exclusive piece by Observer Net. Reproduction without permission is prohibited.

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