Mexico is preparing to impose a sweeping 50 per cent tariff on Chinese cars imports in a move that reflects mounting trade pressure from the United States and growing concern over the impact of Asian competition on its domestic industries.
The proposal, announced by Mexico’s Ministry of Economy on Wednesday, marks a dramatic escalation from the current tariff level of 15–20 per cent.
If passed by Congress, the new policy would also extend to auto parts, with duties ranging from 10 to 50 per cent, depending on classification.
The initiative comes against the backdrop of tense US-China trade relations and signals Mexico’s intent to shield its economy from becoming a conduit for Chinese goods entering the North American market under the United States-Mexico-Canada Agreement (USMCA) framework.
The United States, Mexico’s largest trading partner, has repeatedly accused Chinese manufacturers of exploiting loopholes in trade deals to access the American market.
According to the White House, Chinese producers have been using Mexico as a “back door” to export vehicles and other goods northward without paying the higher tariffs imposed directly by Washington.
US President Donald Trump has been vocal in demanding stricter measures.
In line with his “America First” trade agenda, Trump has imposed a 25 per cent tariff on car imports, while exempting vehicles with sufficient US content assembled in Mexico.
By announcing this measure, Mexico appears to be balancing diplomatic pressure from Washington with domestic political considerations, while also attempting to reposition its manufacturing sector as globally competitive rather than dependent on Chinese imports.
The response from Beijing was swift. Chinese Foreign Ministry spokesperson Lin Jian criticized the proposed tariffs, warning that such measures undermine “China’s legitimate rights and interests.”
Lin emphasized China’s long-standing cooperation with Mexico, saying:
“China attaches great importance to the development of China-Mexico relations, and hopes that Mexico will move forward in the same direction with China.”
Although Lin refrained from directly naming the United States, the comment highlights Beijing’s concern over the growing alignment between Mexico and Washington on trade restrictions.
According to President Claudia Sheinbaum’s government, the tariff hike is not only about international politics but also about defending local industries.
The proposed legislation identifies 19 “strategic sectors” that could benefit from stronger protection, including automotive manufacturing, electronics, steel, and machinery.
Mexico’s Ministry of Economy said the policy would help safeguard an estimated 325,000 jobs and potentially create thousands more as domestic production replaces Asian imports.
The ministry’s statement explained:
“The reforms aim to protect national industry, reduce dependency on Asian imports, and improve Mexico’s trade balance.”
Mexico has seen a surge in Chinese imports in recent years, particularly in the auto sector.
Data shows that two out of every 10 light vehicles sold in Mexico are Chinese brands, with sales growing 10 per cent in 2024 alone.
Mexico overtook China in 2023 to become the United States’ largest trading partner.
Today, over 80 per cent of Mexican exports head to the US, with automobiles accounting for a major share.
The country exports nearly three million vehicles annually to the US market, including models produced by American giants General Motors and Ford, as well as Japanese and German automakers such as Nissan, Toyota, Honda, and Volkswagen, who maintain major plants in Mexico.
For Washington, the stakes are high: protecting American manufacturing jobs while maintaining seamless North American supply chains.
For Mexico, the balancing act is even more delicate, as it must protect its relationship with China—one of its top sources of industrial inputs—while not alienating its northern neighbor.
If passed, Mexico’s tariff proposal could trigger ripple effects across global trade.
Besides China, the bill also includes higher tariffs on imports from South Korea, India, Indonesia, Russia, Thailand, and Turkey—countries with which Mexico has no formal trade agreement.
This could reshape supply chains and encourage multinational companies to expand their production footprint within Mexico to avoid tariff hikes.
It may also give Mexico more leverage in attracting foreign direct investment (FDI) into its industrial zones.
President Claudia Sheinbaum, who succeeded Andrés Manuel López Obrador, has faced pressure from both domestic industries and foreign partners to chart a more assertive trade policy.
Her ruling party holds a majority in Congress, which increases the likelihood that the bill will be passed without significant opposition.
Analysts argue that the measure reflects Mexico’s dual priorities: securing its economic partnership with the United States while boosting its own industrial resilience.
“Mexico cannot afford to be caught in the middle of a US-China trade war without taking proactive measures,” said Manuel Ortiz, a trade policy expert at UNAM.
“This tariff is as much about geopolitics as it is about protecting jobs.”
If approved, the tariffs could take effect in early 2026, ushering in a new phase of Mexico’s trade relations.
While they may shield local industries, there are concerns that higher import costs could affect consumer prices and limit access to affordable vehicles.
Still, with the United States accounting for the lion’s share of Mexico’s trade flows, experts say the government’s decision reflects a pragmatic calculation.
As the global trade environment grows increasingly fragmented, Mexico’s move underscores the rising pressure on middle powers to pick sides in economic disputes between the world’s two largest economies.