India-Mexico trade faces new headwinds amid threat of up to 50% tariff on Asian goods

The Mexican government has green-lit a sweeping tariff increase of up to 50% on imports from China and several other Asian nations, including India, South Korea, Thailand and Indonesia, as part of a broader effort to bolster domestic industries ahead of the implementation date on January 1, 2026. 

The tariff package, passed by Mexico’s lower house, will raise duties on a wide range of products — from automobiles and auto parts to textiles, plastics and steel — targeting countries without existing trade agreements with Mexico. The bulk of affected items will face hikes of up to 35%, with selected categories hit by the full 50% levy.

This follows similar tariff actions earlier this year by the Trump administration targeting Indian imports, underscoring rising trade protectionism globally. 

Analysts suggest that Mexico’s moves are partly aimed at placating the United States ahead of the next review of the United States-Mexico-Canada Agreement (USMCA), while also generating an estimated $3.76 billion in additional revenue to help narrow Mexico’s widening fiscal deficit, according to a Reuters report. 

The United States has been encouraging Latin American partners to limit economic ties with China, a strategic competitor for influence in the region. Mexico’s tariff escalation aligns with that push, although critics argue it may strain relations with key trading partners, especially India. 

India-Mexico trade in a nutshell   

Bilateral trade between India and Mexico has shown steady growth over the past five years. Total trade expanded from $7.9 billion in 2019-20 to over $8.4 billion in 2023-24, with Indian exports rising from $3.6 billion to $5.3 billion during the same period — a 10.1 % compound annual growth rate (CAGR). India’s trade balance with Mexico has swung in its favour, from a deficit of $0.7 billion in 2019-20 to a surplus of $2.2 billion in 2023-24, as Mexican imports into India declined, according to CII data.

India’s top exports to Mexico in 2023-24 

Rank	Commodity	Exports ($ million)
1	Vehicles (excl. railway/tramway)	1,697
2	Machinery & mechanical appliances	521
3	Electrical machinery & equipment	509
4	Organic chemicals	337
5	Aluminium & articles thereof	302
6	Iron and steel	236
7	Pharmaceutical products	212
8	Articles of iron or steel	176
9	Ceramic products	142
10	Plastic and articles thereof	118

Data source: Government of India, Ministry of Commerce and Industry (2023-24 Export Values).

India’s export portfolio to Mexico is diversified, led by vehicles, followed by machinery, electrical equipment, organic chemicals and aluminium. Over 200 Indian companies — spanning sectors such as information technology, pharmaceuticals and automotive manufacturing — operate in Mexico, with total Indian investments reaching approximately $4 billion as of March 2024.

Mexican firms, including Cinepolis, Softtek and Metalsa, have also established a presence in India, contributing roughly $331 million in cumulative investments between April 2000 and June 2024.

With the new tariff regime looming, Indian exporters — particularly in the automotive and machinery sectors — can expect to see some impact.