Mexico slaps 50% tariffs on Asian imports, hitting India’s auto exports hardest
The new tariff reveals how fragile global supply-chain diversification has become, with Indian exporters now facing higher costs, shrinking market access, and tougher geopolitical realities.
For years, global manufacturers have banked on the "China Plus One" strategy to diversify supply chains. But a new trade policy from Mexico is proving that the road to diversification is far from smooth.
In a move that has sent shockwaves through the Global South, Mexico has approved aggressive new tariffs of up to 50% on imports from select Asian nations. While the policy is widely seen as a shield against Chinese goods, the collateral damage is landing squarely on India, placing over $1 billion worth of exports in the crosshairs.
The new tariffs, set to take effect on January 1, 2026, mark a significant pivot in Mexico's trade strategy. The country is shaking up its policies to protect domestic industries and reduce reliance on Asian imports—specifically from China, which accounted for $130 billion in Mexican imports in 2024.
Emmanuel Oyedeji
However, because the tariffs apply to countries without a free trade agreement with Mexico, India is facing the same penalty. This complicates the narrative for Indian tech and manufacturing giants who have been positioning themselves as the new "factory of the world."
The hardest hit sector is India’s booming automotive industry. Mexico is currently India’s third-largest car export market (after South Africa and Saudi Arabia). The new policy will see import duties on cars jump from 20% to 50%, a hike that renders Indian vehicles competitively unviable against North American counterparts.
This deals a direct blow to major players like Volkswagen, Hyundai, Nissan, and Maruti Suzuki, who use India as an export hub. Industry bodies have already flagged the severity of the move, noting that a 50% tariff wall effectively shuts the door on Indian vehicles in one of their most critical growth markets.
Emmanuel Oyedeji
Why is Mexico adding a 50% tariff?
At first glance, this looks like simple protectionism. But dig a little deeper, and the geopolitical maneuvering becomes clear. Analysts suggest the tariffs are a strategic play to appease Washington ahead of the upcoming United States-Mexico-Canada Agreement (USMCA) review. The U.S. has long been concerned about Mexico being used as a "backdoor" for Asian goods to enter the North American market duty-free.
At the same time, Mexican President Claudia Sheinbaum has been vocal about increasing domestic output. By making imports prohibitively expensive, the government hopes to force companies to move actual manufacturing, not just assembly, onto Mexican soil.
The bottom line
This development isn’t just a tariff hike; it’s a signal that the era of frictionless global trade is cooling, replaced by regional fortresses. For Indian exporters, the clock is now ticking. The next 12 months will likely see a flurry of high-level diplomatic channels opening up to salvage the $1 billion trade corridor.
But for now, the message to global manufacturers is clear: The "China Plus One" strategy is no longer a guarantee; it’s a gamble. The question now is whether other Latin American nations follow Mexico's lead to protect their own industries.
Emmanuel Oyedeji
