Why Did Mexico Impose a 50% Tariff on Chinese Cars?

On September 10, 2025, the Mexican government announced plans to increase import tariffs on cars from China and other Asian countries.​50%​The tax rate will be significantly increased compared to the current rate of 15%-20%.

The tariff adjustment proposal is part of Mexico's 2026 federal budget plan, covering nearly 1,500 items, with imports totaling approximately $52 billion to be affected.

Source: Shunguan World

01 Tariff Adjustment Facts

Mexico's latest tariff adjustment targets all countries with which it has not signed a free trade agreement. The main target countries include China, South Korea, India, Indonesia, Russia, Thailand, and Turkey.

In addition to the automotive industry facing a 50% tariff, steel, toys, and motorcycles will also face tariffs.​35%tariff​Tariffs on textiles range from 10% to 50%.

The proposal still requires approval from the Mexican Congress, but since the ruling party and its allies hold an absolute majority in both houses, there is less resistance to its passage. The new tariff measures are expected to take effect 30 days after being published in the Federal Official Gazette.

02 Mexico's Multiple Motivations

The Mexican government claims that the policy aims to protect jobs and domestic industries. Marcelo Ebrard, Mexico's Minister of Economy, stated: "Without a certain degree of protection, Mexico's automotive industry would hardly be able to compete with Chinese cars."

According to estimates by the Mexican Ministry of Economy, this plan will affect 8.6% of all imported goods in Mexico and protect...​32.5Ten thousand industrial and manufacturing jobs at risk.​​。

Analysts point out that Mexico's move is largely a response to pressure from the United States. The Trump administration has been urging Mexico since the beginning of the year to follow the U.S. example and raise tariffs on Chinese imports.

Mexican Finance Minister Edgar Amador acknowledged that this move is closely related to the ongoing and future trade negotiations among the United States, Mexico, and Canada.

However, when formulating its tax increase policy, Mexico seems to be engaging in a sort of "time lag game." This tax increase plan has been included in the 2026 budget plan, and even if passed by Congress, it will not be implemented until the year after next. This arrangement demonstrates Mexico's subtle balancing act in its diplomatic and trade policies. On one hand, it aims to appease the United States and avoid immediate retaliatory measures from the U.S.; on the other hand, it allows for some buffer space in trade negotiations between China and the U.S., preventing a complete provocation of China by immediately implementing the tax increase. Mexico hopes to find a balance between the two major economic powers, the U.S. and China, to both placate the U.S. and avoid severely damaging its trade relationship with China. After all, China is one of Mexico's important economic and trade partners in the Asia-Pacific region, with bilateral trade amounting to $109.4 billion. Mexico's domestic manufacturing heavily depends on China's electromechanical equipment and auto parts.

03 The impact on China's automobile industry.

Mexico has surpassed Russia to become the largest global export market for Chinese automobiles. In the first half of 2024, China's automobile exports to Mexico increased by nearly 25% year-on-year.

Chinese cars have a significant price advantage in the Mexican market, with prices for similar SUVs nearly 20% lower than Japanese and American models. Some brands offer warranties of up to 10 years, far exceeding the industry standard of 3 years.

High tariffs will significantly weaken the price competitiveness of Chinese cars, and export volumes may be impacted. The expansion momentum of some Chinese brands in Mexico will face challenges. However, companies like BYD and Chery, which have already localized production in Mexico, will be minimally affected by the tariffs.

04 The complex entanglement of the industrial chain

The Mexican government claims that the tax increase is aimed at "reducing dependence on Chinese goods," but the reality is that the Mexican manufacturing industry is actually heavily reliant on Chinese components and raw materials. For example, the Mexican automotive industry.​38.6%Components​Originating from China, 50% of the textile industry's chemical fiber raw materials rely on imports from China.

Shortly after the announcement of the tariff policy, three large automotive assembly plants in the industrial area of northern Mexico halted production due to a "supply disruption of Chinese parts," and 5,000 workers took to the streets in protest.

This reflects the complex interdependence of global supply chains: even if Mexico wants to reduce its reliance on China, it is difficult to find alternative suppliers in the short term.

05 China's Response and Countermeasures

At the regular press conference on September 11, Chinese Foreign Ministry spokesperson Lin Jian stated that China consistently advocates for inclusive and mutually beneficial economic globalization and opposes all forms of unilateralism, protectionism, as well as discriminatory and exclusionary measures.

China firmly opposes any restrictions imposed on China under various pretexts due to coercion by others, which undermine China's legitimate rights and interests. China will resolutely safeguard its own rights and interests according to the actual situation.

The Ministry of Commerce of China has previously issued the "Statement on Principles of Trade Countermeasures," clearly stating that it reserves the right to carry out "reciprocal counterattacks" against discriminatory tariffs. China also reserves the option to initiate litigation through the WTO dispute settlement mechanism.

06 More affected industries

Apart from automobiles, Mexico's tariff policy will also target multiple industries: steel products will be subject to tariffs.​35%Tariff​…especially for round steel bars with a diameter of less than 14 millimeters, the tariff is as high as 50%.

Toys and motorcycles are both subject to a 35% import tariff.
Textile tariffs are set between 10% and 50% depending on the product category.

The tariffs on household appliances, furniture, and footwear are also around 35%.
Chinese products in these sectors have a relatively high market share in Mexico, and they will be significantly affected after tariff adjustments.
Edited by: Lily