Mexico’s New Tariffs Could Hit India’s $5.6 Billion Export Pipeline

Mexico has announced a sharp increase in import tariffs on goods coming from countries that do not have a free trade agreement with it. India falls into this group. The new tariffs are expected to come into effect from 2026 and can go as high as 50 percent on selected product categories.

While the move is not aimed at India alone, export data shows that India is significantly exposed. Several of India’s biggest export categories to Mexico overlap directly with the sectors facing higher tariffs.

What Mexico has announced

Mexico plans to raise tariffs on more than 1,400 product lines imported from non-FTA countries. The tariff range varies by product, but in sectors like automobiles, metals, textiles, and industrial goods, duties can rise sharply.

The stated objective is to protect domestic manufacturing, reduce reliance on imports from non-preferential trade partners, and strengthen local supply chains.

India’s export exposure to Mexico

In 2024, India exported goods worth $5.63 billion to Mexico. This is not a small or marginal market. What matters more is the composition of these exports.

The single largest export category is vehicles other than railway or tramway, valued at $1.86 billion. This alone accounts for roughly one-third of India’s total exports to Mexico.

Other major export categories include:

This data shows that India’s exports to Mexico are heavily skewed towards manufactured and industrial goods, which are precisely the sectors Mexico is targeting with higher tariffs.
Source: Trading Economics

Why the risk is concentrated, not spread out

The biggest concern is not just the total export value, but where that value sits.

Vehicles, machinery, electronics, metals, and textiles together form the backbone of India’s export basket to Mexico. These are also price-sensitive sectors where even a moderate increase in tariffs can change buying decisions.

If tariffs on vehicles and auto-related products rise meaningfully, a large part of India’s $1.86 billion auto export segment becomes less competitive overnight. The same applies to aluminium, steel, machinery, and electronics, where Mexico has domestic production and alternative suppliers from FTA countries.

Why pharmaceuticals and some chemicals are relatively safer

Pharmaceutical exports, valued at $211 million, are meaningful but less exposed. These products are not the primary focus of Mexico’s tariff action and tend to compete more on quality and regulation rather than pure price.

Similarly, some specialty chemicals and medical instruments may face lower relative risk compared to mass-manufactured goods like vehicles or metals.

This distinction helps avoid the assumption that all Indian exports are equally affected.

Why India is impacted more than some other countries

The key issue is the absence of a free trade agreement between India and Mexico.

Mexico has FTAs with the US, Canada, the European Union, Japan, and several Latin American countries. Goods from these regions enjoy lower or zero tariffs. Indian goods do not.

As a result, even if Indian manufacturers are efficient, their products become more expensive compared to competitors simply because of tariff structure, not quality or capability.

What this means for Indian exporters

Higher tariffs increase the landed cost of Indian goods in Mexico. Importers may either demand price cuts from Indian exporters or switch suppliers.

For sectors like autos, metals, electronics, and textiles, this can lead to loss of volumes and margin pressure. Even a partial shift away from Indian suppliers can translate into hundreds of millions of dollars in lost exports over time.

Possible responses from India and Indian companies

At the policy level, India can engage Mexico through focused trade discussions rather than waiting for a full free trade agreement. Sector-specific relief, even if limited, can reduce damage.

For companies, supply chain strategies may change. Some exporters may explore assembling or manufacturing in Mexico to avoid tariffs. Others may diversify markets to reduce reliance on Mexico.

These responses involve costs, but they may be necessary to protect long-term market access.

The larger message for India’s trade strategy

Mexico’s tariff move highlights a broader issue for India. As global trade becomes more regional and protectionist, the absence of trade agreements carries real economic costs.

India’s exposure in Mexico shows that competitiveness today is shaped not just by pricing and quality, but also by trade frameworks.

Conclusion

Mexico’s new tariffs are not aimed at India specifically, but the data makes one thing clear. India’s exports to Mexico are concentrated in sectors that face the highest risk from these changes.

With vehicles alone making up nearly one-third of exports, the impact could be significant if corrective steps are not taken. How India responds, through trade talks, business adaptation, or market diversification, will decide whether this remains a short-term disruption or a longer-term setback.

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