Mexico to Impose Up to 50% Import Duties on Non-FTA Countries from 2026

New Delhi: Mexico has decided to impose additional import duties of up to 50 per cent on goods originating from countries with which it does not have free trade agreements (FTAs), a move that will come into force on January 1, 2026. The decision is expected to directly impact India and several other exporting nations, prompting New Delhi and Mexico City to initiate discussions towards a bilateral Free Trade Agreement.

Economists note that the unilateral tariff hike is primarily aimed at sectors such as automobiles and auto components, textiles and garments, plastics, steel and other metals, and footwear.

Key Details

Under the new policy, Mexico will levy import duties ranging from 5 per cent to 50 per cent on approximately 1,463 product categories imported from non-FTA countries, including India, China, South Korea, Thailand and Indonesia. While the official list of affected items has not yet been released, the revised tariff structure will take effect from January 1, 2026.

Automobiles in Focus

According to Jahol Prajapati, Research Analyst at Samco Securities, the protectionist tariff package approved by the Mexican Senate will significantly impact more than 1,400 products from non-FTA countries. “Automobiles, auto components, textiles and steel are the primary targets. While tariffs on most products will be capped at around 35 per cent, duties on passenger vehicles will rise sharply from 20 per cent to 50 per cent,” he said.

During the 2024–25 financial year, India exported goods worth approximately USD 5.7 billion to Mexico, with nearly one-third of this value coming from the automobile sector.

The new tariffs pose a direct challenge to Indian vehicle exports by manufacturers such as Volkswagen/Skoda, Hyundai, Maruti Suzuki and Nissan. The Mexican market accounts for nearly 9 per cent of India’s global automobile exports, and the higher duties are expected to affect both volumes and profitability. Beyond automobiles, exports of engineering goods, electronics and metals are also likely to face demand pressures due to the steep tariff increases.

Move Towards FTA Talks

Mexico’s Congress approved the new tariff legislation on December 11, 2025, with the stated objective of boosting domestic manufacturing and reducing trade imbalances.

India had begun engaging with Mexican authorities at an early stage, even when the bill was first proposed. On September 30, 2025, the Indian Embassy in Mexico held discussions with the country’s Ministry of Economy, seeking specific exemptions for Indian products.

In light of the new tariff regime, both countries are now preparing to formally launch negotiations for a Free Trade Agreement. Officials expect the Terms of Reference (ToR) for the talks to be finalised shortly, setting the stage for structured negotiations aimed at mitigating trade disruptions and strengthening bilateral economic ties.