After US, Mexico Slaps Up to 50% Tariffs on Indian Goods; Major Hit to Auto Exports

Mexico Joins US in Tightening Trade Rules, Announcing Up to 50% Tariffs on Indian Products in a Push to Protect Domestic Industry.

Mexico has approved a sweeping set of new import tariffs—ranging from 5% to as high as 50%—targeting countries with which it does not have free trade agreements, including India, China, South Korea, Thailand and Indonesia. The tariff overhaul covers nearly 1,400 product categories, extending to major sectors such as automobiles, auto parts, textiles, apparel, plastics, steel, footwear, electrical machinery and industrial components. The new duties will come into force on January 1, 2026, marking one of the most significant shifts in Mexico’s trade policy in recent years.

According to official statements and analyst assessments, the primary objective behind the tariff hike is to protect Mexico’s domestic manufacturing base, support local businesses and reduce import dependence on Asian economies. The government expects the new levies to generate an estimated $3.76 billion in additional annual revenue. However, experts suggest there is also a geopolitical dimension to the policy shift: the move is believed to be influenced partly by pressure from the United States, which has been urging Mexico to reduce reliance on Chinese and other Asian supply chains ahead of the upcoming USMCA review.

For India, the impact could be substantial. Mexico is one of the largest destinations for Indian automobile exports, and the tariff on fully built cars exported from India will now rise sharply—from 20% to 50%. This could directly affect nearly $1 billion worth of annual shipments from major global manufacturers that export from India, including Volkswagen, Hyundai, Nissan and Maruti Suzuki. Other Indian export segments such as auto components, steel, machinery, textiles and plastics are also expected to face significant cost pressures, threatening competitiveness and potentially reducing India’s market share in one of Latin America’s most important consumer economies.

This policy shift comes on the heels of similar protectionist measures by the United States in 2025, where Washington imposed steep duties on a wide range of Indian and Asian imports. Taken together, these actions highlight a growing global trend toward protectionism, particularly among major North American economies seeking to shield local industries, secure supply chains and counter the strategic influence of Asian manufacturing hubs.

The tariff decision has sparked mixed reactions within Mexico. Business groups and manufacturing associations have warned that sharply higher import duties could raise production costs, slow industrial activity and push inflation higher. China has formally criticised the move as protectionist and harmful to global trade stability. India, meanwhile, has not yet issued a detailed official response, though industry leaders expect the government to assess the developments closely and consider diplomatic engagement, WTO consultations or bilateral discussions to mitigate the impact on Indian exporters.

As global trade equations continue to shift, Mexico’s tariff overhaul is being watched closely by policymakers and industries worldwide, given its potential to reshape supply chains, redirect global manufacturing flows and redefine trade relations across the Americas and Asia.