China, India Warn Mexico Against Unilateral Tariff Increases

China is assessing its options following Mexico’s decision to increase tariffs on imports from countries without free trade agreements, with Beijing pledging to monitor the measures and evaluate their impact as it pushes back against what it calls unilateral and protectionist actions.

"China has always opposed all forms of unilateral tariff increases and hopes Mexico will correct such unilateralist and protectionist practices as soon as possible," the commerce ministry said.

According to two sources and a letter from an industry group reviewed by Reuters, the new tariff will affect roughly US$1 billion in vehicle exports from major automakers such as Volkswagen and Hyundai. 

India Also Faces Impact as Mexico Raises Tariffs 

The Society of Indian Automobile Manufacturers, whose members include VW, Hyundai, and Suzuki, urged India’s Ministry of Commerce in November to press Mexico to “maintain the status quo” on tariffs for vehicles exported from India, according to a copy of the letter.

The group warned that “the proposed tariff increase is expected to have a direct impact on Indian automobile exports to Mexico (…) We request the support of the Government of India to engage with the Mexican Government,” in its communication sent before the tariff decision was finalized.

The hike is expected to force Indian automakers to reconsider strategies that rely heavily on Mexico, India’s third-largest vehicle export market after South Africa and Saudi Arabia. Piyush Arora, Head, VW’s Indian unit Skoda Auto Volkswagen, noted that India has long served as a key export hub, with shipments to more than 40 countries. “Mexico has always been one of our key export markets, given the rising demand there and the strong reception of our India-made models,” he said.

Mexico Targets Asian Goods

This week, Mexico’s Congress approved raising tariffs to as high as 50% starting in 2026.  According to Mexican authorities, Mexico’s broader tariff initiative aims to bolster local industry, protect jobs, and strengthen the domestic market by applying duties across a wide range of sectors.

The plan originally targeted 1,463 tariff items, covering products both previously taxed and untaxed. Following review with the Ministry of Economy, 391 items retained existing tariffs, while adjustments were made based on import volumes and sourcing from countries with free trade agreements.

The revised package removed 115 classifications, added 115 new ones, and reduced tariffs to 5% for 104 items to align with Mexico’s main trading partners. 

Key sectors such as automotive, aluminum, and vehicles largely maintained their tariffs, though some auto parts and distributor-related categories were removed. Overall, about two-thirds of the package saw an average 28% reduction compared with the president’s original proposal, with more than 60% of the initial plan modified during committee deliberations.

The decision comes amid US pressure on Mexico to limit commercial ties with China, despite objections from domestic business groups warning that higher tariffs will increase costs.