New Delhi warns of strict measures against Mexico's tariff hike.
In a significant development impacting global commerce, India has formally expressed its dissatisfaction with Mexico's decision to drastically increase customs duties on goods imported from nations that do not share a free trade agreement (FTA). New Delhi has made it clear that while it prioritizes dialogue, it is prepared to implement necessary protective measures to safeguard the interests of domestic exporters.
The controversy stems from a legislative bill recently greenlit by the Mexican Congress. Once enforced on January 1, 2026, this new policy will hike tariffs on products originating from several key economies, including India, China, and Brazil.
Impact on Key Sectors
The scope of this legislative change is massive. The bill targets adjustments across 1,463 different tariff categories. Indian industries are closely monitoring the situation, as the revised duties—ranging between 5% and 50%—will hit vital sectors. The most affected areas are expected to be automotive components, textiles, footwear, aluminium, glass, and clothing.
Government sources indicate that India views this unilateral move as contrary to the spirit of economic cooperation. While New Delhi acknowledges that the primary motivation behind Mexico's move might be unrelated to India, the lack of prior consultation on raising "Most Favored Nation" (MFN) tariffs is a sticking point.
Diplomatic Channels Active
The Indian administration has moved swiftly to address the looming trade barrier. Commerce Secretary Rajesh Agrawal has already initiated high-level talks with Luis Rosendo, Mexico’s Vice Minister of Economy. Further technical discussions are on the schedule to mitigate the impact.
Initially, Mexico’s economy ministry had postponed this proposal until late 2026 due to industry pushback. However, the bill was unexpectedly fast-tracked earlier this month. The Mexican government maintains that these tariffs are essential for boosting local manufacturing and correcting trade imbalances, projecting an annual revenue boost of nearly $3.8 billion.
The Geopolitical Angle
Market analysts suggest that Mexico's decision is not happening in a vacuum. It appears to be heavily influenced by trade policies in the United States, specifically regarding the United States-Mexico-Canada Agreement (USMCA). There is growing pressure to prevent the transshipment of goods, particularly from China, into the US market via Mexico.
Trade Volume at Stake
The economic stakes are high for New Delhi. In 2023, India ranked as Mexico’s ninth-largest trading partner, with total bilateral trade valued at $10.58 billion. Indian exports, largely comprising vehicles, engineering goods, and pharmaceuticals, accounted for over $8 billion of that total.
While the Department of Commerce is currently evaluating the specific product-level impact, officials have stated that India reserves the right to take appropriate action if diplomatic solutions do not yield results.
