Mexico’s decision to sharply raise import tariffs on countries without a free trade agreement might hurt India’s automobile and auto component exports to one of the nation’s fastest‑growing overseas markets.
Market watchers and experts reportedly told agencies that they estimate nearly three‑quarters of India’s $5.7–5.8 billion exports to Mexico in the current fiscal to be affected once the new duties take effect on January 1, 2026.
Mexico’s Senate and lower house have cleared a package that raises tariffs to between 5 per cent and 50 per cent on over 1,400 product lines from non‑FTA partners such as India, China, South Korea, Thailand and Indonesia. Agencies like Reuters and local Mexican media reported that this move was aimed at protecting local industry and addressing trade imbalances, particularly with China.
The biggest immediate shock for India is in passenger vehicles, two‑wheelers and auto parts, which together account for well over $1.8–2 billion of annual exports to Mexico.
According to the Global Trade Research Initiative (GTRI), tariffs on passenger cars exported from India to Mexico will jump from around 20 per cent to 35–50 per cent, depending on the exact category, severely eroding price competitiveness in a market where USMCA partners (the US and Canada) enjoy duty‑free access.
Auto components, which currently face duties in the 10–15 per cent range and are deeply embedded in Mexico‑based supply chains serving the US market, are expected to see rates of about 35 per cent, making it harder for Indian suppliers to compete with firms located inside North America.
Motorcycle exports, which are a strong segment for Indian companies, are also projected to move from 20 per cent to roughly 35 per cent duties, while industrial machinery, steel, aluminium, electronics and garments could see their prices in Mexico rise by 15–30 percentage points because of the new slabs.
Exporter body FIEO, as reported by agencies, warned that such steep increases risk undoing supply chains that took years to build, and could force Indian firms to rethink Mexico‑centric export strategies or explore local assembly and regional partnerships to stay competitive.
Trade policy analysts note that Mexico, like the US with its earlier tariff actions, is now openly testing the limits of World Trade Organization rules and the most‑favoured‑nation principle, creating a more fragmented and politically driven trade environment that India’s auto and components sector will have to navigate alongside separate US tariff hikes announced this year.
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