Mexico to raise tariffs on imports from China after US push
The Mexican market for Chinese cars has exploded in recent years
[WASHINGTON] The Mexican government plans to increase tariffs on China as part of its 2026 budget proposal next month, protecting the nation’s businesses from cheap imports and satisfying a longstanding demand of US President Donald Trump.
The tariff hikes, expected for imports including cars, textiles and plastics, aim to shelter domestic manufacturers from subsidised Chinese competition, according to three sources briefed on the matter, who asked not to be identified, revealing details of the plans. Other Asian countries are also expected to face higher tariffs, one of the sources said.
Specific tariff rates were not immediately clear, and the plan could change, the sources said. The draft revenue proposal from President Claudia Sheinbaum’s administration is scheduled to be sent to Congress by Sep 8.
While the budget plan will require approval from the legislative branch, Sheinbaum’s party and its allies hold two-thirds majorities in both houses, limiting likely changes by lawmakers. The president’s office and the Economy Ministry had no immediate comment. The Finance Ministry did not immediately reply to a request for comment.
The Trump administration, since early this year, has urged Mexican officials to raise duties on Chinese imports as the US has done. Mexican officials subsequently floated the idea of a “Fortress North America” that limits shipments from China while strengthening trade and manufacturing ties among the US, Mexico and Canada. US Treasury Secretary Scott Bessent has expressed enthusiasm for the concept.
The nations are also preparing to review the free-trade deal between them, negotiated during Trump’s first term, by the middle of next year.
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“China’s exports to the Latin American region has increased quite a bit this year, helping offset the declines from the US market. In addition to keep Americans happy, Mexico also needs to protect its own manufacturing base,” said Ning Sun, a senior emerging markets strategist at State Street Global Markets in Boston. “I expected Mexico to align its economic and foreign policy with the US.”
American pressure for Mexico, the nation’s largest trade partner, to stem the flow of cheap Chinese goods to the country is motivated in part by Trump’s accusation that the products are entering and then making their way north to the US. Trump gave Mexico a reprieve from higher tariffs last month after a call with Sheinbaum to allow more time for trade negotiations.
Mexico and the US are also closing in on a deal to combat drug trafficking and violence. Trump has cited fentanyl trafficking as the reason Mexico is paying a 25 per cent levy on goods that do not fall under the nations’ free-trade pact. Addressing that issue in the new security deal would make it easier for negotiators to find common ground on other areas of conflict, such as tomatoes and steel.
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Chinese cars
The Mexican market for Chinese cars has exploded in recent years, with Mexico becoming the top global destination for Chinese vehicles this year, overtaking Russia, according to the China Passenger Car Association. While the vehicles face tariffs of as much as 20 per cent in Mexico, that pales in comparison to the US, where former president Joe Biden added a 100 per cent duty on Chinese EVs and banned most cars with software developed in China.
“If the tariffs aren’t high enough to allow Mexican companies to compete in the domestic market, they will be ineffective. It’s also a bit late,” said Vanessa Ramírez, managing director of the private consultancy Economic Analysis for Company Planning, or Ecanal. “The government hasn’t sent the right signals to the private sector regarding Chinese inputs.”
Increased tariffs on China would boost Mexican revenue and help Sheinbaum’s push to find ways to rein in Mexico’s budget deficit, which reached the widest since the 1980s in 2024 as her predecessor spent heavily to complete flagship projects before leaving office. Her administration has pursued higher tax collection while pledging to avoid a major tax increase.
Sheinbaum’s government has sought to boost domestic industry through the so-called “Plan Mexico”, which focuses on industrial parks and public spending projects aimed at stimulating investment amid the uncertain trade environment. Sheinbaum has previously raised duties on some foreign goods, including textiles and direct-to-consumer clothing. BLOOMBERG
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