Now, Mexico to slap tariffs; may hit Indian car companies

Mexico's Senate Wednesday voted in favour of a bill that imposes tariffs of 5% to 50% on over 1,400 products from Asian nations, including India. The levies will take effect from next year and hit products ranging from clothing to auto parts, with the massive output of Chinese factories emerging as the legislation's focus.

For India, which has a trade surplus with Mexico, this could be bad news for automobiles and auto parts. Annual exports of firms such as Volkswagen, Hyundai and Maruti Suzuki added up to around $1.1bn with 90,000 units being shipped. Two-wheeler brands like Royal Enfield, TVS, Bajaj and Honda may also be hit.

Mexico's decision to impose 5-50% tariffs to affect India

After the US, now Mexico is erecting tariff barriers for countries with which it does not have a trade agreement, including India.

Mexico's Senate on Wednesday voted in favour of a bill that imposes tariffs between 5% and 50% on more than 1,400 products from Asian nations, Bloomberg reported. The new levies will take effect starting next year and hit a wide range of products from clothing to metals and auto parts, with the massive output of Chinese factories emerging as the legislation's focus.

For India, which has a trade surplus with Mexico, the move could be bad news for automobiles and auto parts. Companies such as Volkswagen, Hyundai and Maruti Suzuki, whose exports added up to around $1.1 billion in 2024-25, shipments of around 90,000 units may be hit.

"India has been a strong export base for Skoda Auto Volkswagen for many years and that continues to guide how we build and engineer cars for global markets... Mexico has consistently been one of our important export markets, given rising demand there and traction of India-made models. We are monitoring the situation. For the moment, we have come to the conclusion that our business activities are not affected," Skoda Auto Volkswagen said.

Two-wheeler brands such as Royal Enfield, TVS, Bajaj and Honda are also understood to be exporting to the Latin American country. Besides, component exports to Mexico were estimated at around $850 million in 2024-25 and some of these were used by companies to manufacture vehicles headed to the US.

"India's auto component exports to Mexico largely comprise powertrain and driveline parts, precision forgings, chassis and brake systems, and key electrical and after-market products. There is a strong demand, especially for forgings and precision machined components," Auto Component Manufacturers Association director general Vinnie Mehta told TOI.

While higher taxes will yield around $2.8 billion revenue for the Mexican govt, it is seen to have facing US President Donald Trump's pressure on Mexican President Claudia Sheinbaum to reduce imports from China.

"...(It) is a signal of deepening global trade tensions, closely linked to future bilateral agreements. This is likely to disrupt established supply chains that used Mexico as a base to push exports into US ... sectors such as auto components, textile, and engineering goods are likely to be impacted by these tariffs. The new Mexico tariffs ranging from 35% to 50% on these products will make Indian exports through the countries with US FTA more cost-competitive if Indian is able to conclude long-term bilateral agreements with those nations," said Saurabh Agarwal, tax partner at EY India.

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