Mexico announced temporary import tariffs of up to 50% on more than 500 products

Mexican President Lopez signed a decree on the 22nd, imposing temporary import tariffs of 5% to 50% on 544 items including steel, aluminum, textiles, clothing, footwear, wood, plastics and their products. The decree came into effect on April 23 and is valid for two years.

According to the decree, textiles, clothing, footwear and other products will be subject to a temporary import tariff of 35%; round steel with a diameter of less than 14 mm will be subject to a temporary import tariff of 50%.

For goods imported from regions and countries that have signed trade agreements with Mexico, if they meet the relevant provisions of the agreement, they will enjoy preferential tariff treatment.

Categories involved

Part of the list of tax increases is as follows:

View the full list and original announcement (can be sent to Mexican customers): https://www.dof.gob.mx/nota_detalle.php?codigo=5724207&fecha=22/04/2024#gsc.tab=0&continueFlag=029c9d5d4d2f21c540d5258c7b2dbd1b

Gabriela Cillier, director of economic analysis at Mexico's BASE Financial Group, believes that tariff measures may lead to increased inflationary pressure in Mexico, and "protectionism does not work anywhere."

To prevent unfair competition

Mexico's Economy Minister Raquel Buenrostro said on Tuesday that the government's goal is to "prevent unfair competition."

"We see a lot of products coming into Mexico at very low prices and displacing our domestic producers," she said at a Council of the Americas event in Mexico City.

"Domestic prices are not going down, but cheap imports are displacing textile manufacturers, footwear manufacturers and other manufacturers," she said. "This worrying import comes from countries that do not have a trade agreement with Mexico."

At the same time, the Mexican Ministry of Economy also stated that the new tariffs are intended to provide certain and fair market conditions for national industrial sectors facing vulnerable situations, thereby promoting the development of national industries and supporting the internal market.

Previously, on August 16, 2023, Mexico raised import tariffs on 392 tariff items. Nearly 92% of the products in these tariff items are now subject to a 25% import tariff, and only certain textiles will be subject to a 15% tariff. All of these are also aimed at countries that have not signed a free trade agreement with Mexico. It will be valid until July 31, 2025.

China is Mexico's second largest trading partner

Mexico is a major Latin American economy, a member of the US-Mexico-Canada Agreement (formerly the North American Free Trade Area), one of the world's most open economies, and has signed free trade agreements with 50 countries. It has a complete range of industries, including relatively developed petrochemicals, electricity, mining, metallurgy and manufacturing. According to statistics, the GDP in 2022 is 1.4 trillion US dollars.

In terms of foreign trade, Mexico mainly exports crude oil, industrial products, petroleum products, clothing, agricultural products, etc., and its main export destinations are the United States, Canada, the European Union, Central America, China, etc.; it mainly imports food, pharmaceutical products, communication equipment, etc., and its main import sources are the United States, China, Germany, Japan, South Korea, etc. In 2022, the total foreign trade volume was 1,182.81 billion US dollars, of which exports were 578.19 billion US dollars and imports were 604.61 billion US dollars, up 18.5%, 17.2% and 19.9% year-on-year respectively.

China is Mexico's second largest trading partner, and Mexico is China's second largest trading partner in Latin America. According to statistics from the General Administration of Customs of China, the total trade volume between China and Mexico in 2023 reached 100.2 billion US dollars, of which China's exports were 81.5 billion US dollars and imports were 18.7 billion US dollars. China mainly exports electronic components, kitchen supplies, motor vehicle parts, etc. to Mexico, and mainly imports crude oil, electrical equipment, medical equipment and other products from Mexico.

It is worth noting that shortly before the introduction of this tariff measure, the Mexican Ministry of Economy imposed tariffs on steel nails and steel balls from China. Lopez said at the end of March that steel-related issues have not affected Mexico's trade relations with the United States and China, and claimed that the government does not want to be involved in any form of "war, even a trade war."

Source: Comprehensively compiled from Xinhuanet, Phoenix.com, Guangming.com, etc.