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Mexico's decision to sharply raise import duties on goods from countries without a free-trade agreement will significantly disrupt India's exports beginning January 1, 2026, according to a new report by the Global Trade Research Initiative (GTRI).
Mexico has announced to impose steep tariffs of up to 50% from January 1, 2026, on imports from non-FTA partners, sharply hitting Indian exports. The report said that nearly three-quarters of India's shipments to the Latin American economy will come under the revised duties. GTRI highlighted that "nearly 75% of India's $5.75 billion exports to Mexico will be affected as tariffs jump from 0-15% to around 35%" Under the new regime, Mexico will impose tariffs ranging from about 5% to as high as 50% on a wide range of goods from countries that do not have free-trade agreements with Mexico, including India. Automobiles and auto components, India's largest export category to Mexico, will be among the worst affected says GTRI report. Passenger vehicle exports worth USD938.35 million will see duties rise from 20% to 35%, sharply eroding price competitiveness. Auto components worth USD507.26 million will face tariffs increasing from 10-15% to 35%, disrupting India's deep integration into Mexico-based automotive supply chains. Motorcycle exports of USD390.25 million will also be hit as duties move from 20% to 35%. Smartphone exports, previously duty-free, will now face a 35% tariff. GTRI notes that smartphones earlier entered the country duty-free (0%). From January 2026, they will face a 35% tariff, effectively shutting the Mexican market. Steel is the most severely punished sector, as flat products to face a prohibitive 50% tariff, pricing Indian steel out of Mexico. Industrial machinery exports of USD547.99 million will see levies rise from 5-10% to 25-35%, significantly raising landed costs. Garments and made-ups worth USD245.90 million will witness duties rising from 20-25% to 35%, sharply reducing India's competitiveness. Textiles exports will see tariffs increase from 10-15% to 25%, while ceramics will move to 25-35%, squeezing margins. However, pharmaceuticals will see small impact and will remain largely unaffected, with duties moving only from 0-5% to 0-10%, keeping Mexico a stable market for Indian generic medicines. GTRI states that Mexico's action is aligned with U.S. trade priorities. The report notes, "Mexico's move is seen as aligning its trade policy more closely with recent U.S. protectionist measures... signalling support for near-shoring and tighter North American supply chains" However, the report adds that despite the sweeping impact, India is not expected to retaliate as imports from Mexico total just USD2.9 billion, limiting leverage and the economic case for counter-tariffs. New Delhi will instead likely to focus on export diversification as global trade rules face accelerating erosion, says GTRI. (ANI)
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