Mexico has approved a steep new tariff regime that raises duties up to 50% on over 1,400 imported products from countries without a trade agreement. India is on that list, alongside China, South Korea, Thailand and Indonesia.

The move marks one of Mexico’s biggest shifts away from free-trade in decades. Starting next year and expanding through 2026, the higher duties will apply to everyday consumer goods and crucial industrial inputs, including textiles, plastics, metals, auto parts, footwear and machinery. Most items will fall under a 35% tariff slab, while select categories face the full 50%.

Why this matters for India

India has steadily expanded its presence in Latin America, using Mexico as both a standalone market and a strategic gateway into North America’s supply chains. With the new tariffs in place:

• Indian exports especially textiles, leather goods, engineering items and auto components will become significantly more expensive.

• Companies routing supplies to US value chains through Mexico lose their cost advantage.

• Indian firms operating in Mexico face higher landed costs, squeezing margins and competitiveness.

• MSMEs in export-heavy categories may feel the sharpest impact.

Several Mexican manufacturers have already warned that relying less on imports from India and Asia could raise domestic production costs and eventually fuel inflation.

Why Mexico is doing this

Analysts believe the shift is closely tied to US pressure ahead of next year’s USMCA review. Washington has moved aggressively against Chinese supply chains, and Mexico appears to be aligning itself with that stance. Although Mexico’s government denies a link, the tariff structure mirrors recent US trade actions.

Local politics also play a role. Mexico’s auto sector and metal industries have pushed for stronger protection against a surge in cheap Chinese imports. Tariffs on Chinese automobiles will be the steepest at 50%.

What happens next

The new framework gives Mexico’s Economy Ministry the power to adjust tariffs on non-FTA countries at any time. This means Indian exporters should expect more volatility in duties over the next two years.

For India, the situation presents both risk and opportunity. The immediate impact is negative leading to higher costs, lost competitiveness and disrupted supply chains. But if New Delhi uses this moment to accelerate trade engagement with Latin America, India could position itself as a preferred alternative to China in the region.