Mexico's Congress approves tariff hikes on imports from China, others

Tariff increases of as much as 50 per cent will affect textiles, shoes, appliances, cars and auto parts among other things beginning in January.

Mexico's Congress approved Wednesday most of the tariff increases proposed by the government on more than 1,400 products imported from China and other countries that do not have free trade agreements with Mexico.

The Senate passed the measure Wednesday evening, following the lower chamber, which had approved the increases before dawn. The governing Morena party of President Claudia Sheinbaum, who said the tariffs were necessary to spur domestic production, controls both chambers. The Senate passed the legislation with 76 votes in favour, five against and 35 abstentions.

Analysts say the real motivation is ongoing negotiations with Washington, Mexico's most important trading partner.

Sheinbaum has been trying to find relief from remaining tariffs imposed on Mexican imports by the Trump administration, which has accused China of using Mexico as a backdoor into the US market.

Tariff increases of as much as 50 per cent will affect textiles, shoes, appliances, cars and auto parts among other things beginning in January.

China will be the most affected as Mexico imported USD 130 billion worth of products from the country in 2024, second only to the what Mexico bought from the United States. The Chinese government was critical of the proposed tariff increases when they were announced in September.

“The real reason has to do with the United States, it has to do with the review of the USMCA (free trade agreement) that is coming up, with the negotiations to obtain reductions, exemptions from the tariffs that Mexico is facing at this moment to access the US market,” said Oscar Ocampo, director of economic development at the Mexican Institute for Competitiveness. Mexico still faces US tariffs on the automotive sector, steel and aluminum.

But Ocampo said Mexico was bending to an unpredictable US President Donald Trump and changing its commercial policy “in the wrong direction.” He said the government was creating problems for a number of sectors, including auto parts, plastics, chemicals and textiles, because the tariffs will create disruptions in supply chains and could push inflation up at a time when the economy is slowing.