Trade talks: India, Mexico open dialogue to blunt tariff shock; preferential pact on the table

India has begun discussions with Mexico to mitigate the impact of steep import tariffs approved by the Latin American country on goods from non-free trade agreement partners, including India, and to explore the possibility of a preferential trade agreement to safeguard bilateral trade interests, ANI reported.

Mexico has cleared tariff hikes of up to 50 per cent, effective from 2026, on select imports from Asian countries such as India and China. The measure, framed as support for domestic industry and a correction of trade imbalances, raises MFN import duties in the 5–50 per cent range on 1,455 tariff lines under the WTO framework, targeting countries without FTAs.




According to Indian estimates, exports worth around $2 billion could be affected, especially automobiles, two-wheelers, auto components, textiles, iron and steel, plastics, leather and footwear. The proposal was first floated in September 2025, deferred to August 2026 after concerns from non-FTA partners and industry, and then resubmitted on December 3, 2025. It has since been cleared by both houses of Mexico’s Parliament and is awaiting Presidential Gazette notification.

India–Mexico merchandise trade stood at $8.74 billion in 2024, with Indian exports at $5.73 billion and imports at $3.01 billion, resulting in a trade surplus of $2.72 billion for India, according to DGCI&S data. Key Indian exports include light vehicles ($0.88 billion), motorcycles ($0.39 billion), base metals ($0.76 billion), auto parts ($0.74 billion), mechanical machinery ($0.46 billion), textiles and clothing ($0.41 billion), chemicals ($0.43 billion) and pharmaceuticals ($0.38 billion). Major imports from Mexico comprise crude petroleum oils ($1.7 billion), smartphones ($0.27 billion) and gold ($0.17 billion).

The government said it has been closely assessing Mexico’s tariff revisions, engaging stakeholders and pursuing dialogue to protect exporters while ensuring a stable trade environment for businesses and consumers in both countries, ANI reported. The Indian Embassy had raised concerns with Mexico’s Ministry of Economy in late September, which clarified that the measure was not directed against India and reaffirmed commitment to bilateral ties.

“Through continuous engagement thereafter, a virtual meeting between Commerce Secretary Shri Rajesh Agrawal and Vice Minister Dr. Luis Rosendo was held on 2 December 2025, agreeing to pursue a trade agreement to mitigate the impact promptly, with technical discussions initiated from 12 December 2025,” Agrawal said in a presentation.

A recent report by the Global Trade Research Initiative (GTRI) warned that Mexico’s tariff move could significantly disrupt Indian exports from January 1, 2026, noting that the policy aligns more closely with recent US protectionist measures and signals support for near-shoring and tighter North American supply chains.

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