Mexico to Impose Up to 50% Tariffs on Korea, China, and Others Starting Next Year

Tariffs Imposed on Over 1,500 Items
Including Textiles, Apparel, and Auto Parts
Targeting Countries Without an FTA

Starting in the new year, Mexico will raise tariffs on more than 1,500 items, including textiles, apparel, and auto parts, for countries that do not have a free trade agreement (FTA) with Mexico, such as Korea and China. The applied tariff rates will range from 5% to 50%, significantly increasing import costs for goods entering Mexico.

The Mexican presidential office announced on December 30 (local time) that it had published amendments to the General Import and Export Tax Law (LIGIE), which changes tariff rates for specific items, in the official gazette (Diario Oficial de la Federacion).

The effective date is specified as January 1 of next year. The measure covers a total of 1,463 items designated as strategic industrial products by the Mexican government to foster domestic industries, including textiles, apparel, steel, plastics, auto parts, paper, footwear, and aluminum.

The tariff rates are confirmed to range from 5% to 35%, with some steel products subject to rates as high as 50%. While no sunset clause was specified, the Mexican government left open the possibility of partially reducing the increased tariffs to ensure a competitive supply of raw materials.

The countries subject to these tariffs are those that have not signed an FTA with Mexico. This includes Korea, China, India, Vietnam, Thailand, Indonesia, Taiwan, the United Arab Emirates (UAE), and South Africa.

The industry’s main concern is whether incentive benefits based on the "Sectoral Promotion Program (PROSEC)" and the "Maquiladora" export service industry promotion program (IMMEX)-a system that allows companies to import raw materials or parts duty-free to manufacture finished goods for export-can be maintained.

Korean companies operating in Mexico expect that these incentives can be maintained, but are closely monitoring the possibility of unexpected disadvantages during customs procedures.

Regarding this measure, the Korean government has reportedly requested through the Mexican embassy in Korea that the impact on Korean companies be minimized. China, which is expected to be hit hardest, has called for the correction of what it sees as unilateral and protectionist measures, while India has proposed signing a preferential trade agreement.