America had already imposed a 50% tariff on Indian imports, and now another country joins the list. According to a Reuters report, Mexico's Senate approved a 50% tariff on imports from India, China, and several other Asian countries this Wednesday.
This tariff will be effective from January 1, 2026, targeting goods such as automobiles, auto parts, clothing, plastics, and steel from countries without a trade agreement with Mexico. Thus, nations like India, South Korea, China, Thailand, and Indonesia will feel the impact. This decision aims to generate an additional revenue of 3.76 billion dollars next year.
Why Did Mexico Impose Tariffs?
This decision comes at a time when Mexico's President Claudia Sheinbaum is trying to bolster domestic production. However, analysts suggest this move is an effort to appease Trump before the USMCA (United States-Mexico-Canada Agreement) review. The US remains Mexico's largest trading partner.
This new tariff decision follows Mexico's earlier increase in tariffs on Chinese goods. Despite Trump's persistent concerns and criticisms of the Sheinbaum government in recent months, he has threatened a 50% tariff on Mexican steel and aluminum. Additionally, Trump has proposed a 25% extra tariff on failure to curb the flow of opioid fentanyl into the US.
This week, Trump issued another warning of a 5% tariff on Mexico accusing it of violating the 1944 agreement that secures water access for American farmers.
Source: aajtak
How Will the Tariff Impact India?
Mexico's decision to impose up to a 50% tariff on India is likely to affect bilateral trade that peaked at USD 11.7 billion in 2024. India ranks as the ninth largest market for Mexican exports. Currently, India maintains a significant trade surplus with Mexico. In 2024, India's exports to Mexico were about USD 8.9 billion, compared to imports of USD 2.8 billion, resulting in a favorable trade balance for India.
In 2024, key imports from India to Mexico included motor cars, auto parts, and other passenger vehicles. With Mexico imposing hefty duties on these goods, imports may be impacted next year.
