A Deep Analysis of Mexico’s Tariff Issues​

A Deep Analysis of Mexico’s Tariff Issues​

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The Foundation of Mexico’s Tariff System​

Mexico’s tariff system is based on the Foreign Trade Law and the Customs Law. The Customs Law, enacted in 1982, clearly stipulates that all natural persons and legal persons engaged in foreign trade business are required to pay foreign trade taxes, and different taxes are levied on various foreign trade transactions “regardless of their origin or destination”. Ordinary taxes are ad valorem taxes levied in accordance with the Import Tariff Classification List, which is based on the Harmonized Commodity Description and Coding System formulated by the Brussels Tariff Nomenclature. Mexico has set 7 ad valorem tariff rates for imported goods, which are 0%, 5%, 10%, 15%, 20%, 35% and 45% respectively. However, 10 products (such as sugar, cocoa with more than 90% sugar content, and syrup) are subject to specific tariffs, and 45 products are subject to mixed tariffs (such as concentrated milk, fruits, refined foods, and fruit juice products).​

Mexico’s import tariffs are mainly divided into most-favored-nation (MFN) rates and preferential rates. The president has the right to modify tariff rates, and changes in rates will be announced in the Official Gazette in the form of presidential decrees. Goods not produced in Mexico can be imported duty-free from member states of the Latin American Integration Association (ALADI). In addition, in addition to import duties, importers are required to pay a 15% value-added tax (VAT) and a 0.8% customs service fee on the dutiable amount. If the actual imported goods delivered by the importer to Mexico exceed 10% of the import volume specified in the commercial invoice, or contain goods not listed in the commercial invoice, the customs has the right to confiscate these goods as contraband and impose fines on the importer.​

Dynamic Changes in Mexico’s Tariff Policies​

In recent years, Mexico’s tariff policies have been constantly adjusted. On August 15, 2023, the President of Mexico signed a decree, raising the MFN tariffs on a variety of imported products in the steel and light chemical industries starting from August 16. This tariff increase involves 392 tariff items. Except for specific textiles, which are subject to a 15% tariff, all other products are subject to a 25% import tariff, with a validity period until July 31, 2025. The President of Mexico pointed out in the decree that the main reasons for the tariff increase include the pressure on the market caused by the global overcapacity in steel, and the impact of the new crown epidemic and economic growth slowdown on the textile, clothing and footwear industries. By raising tariffs, it aims to provide certainty and fair market conditions for industrial sectors facing adverse situations, promote industrial recovery and development, and support the domestic market.​

In 2024, Mexico’s tariff policy adjustments became more frequent. Starting from April 23, Mexico imposed temporary import tariffs ranging from 5% to 50% on 544 items such as steel, aluminum, textiles, clothing, footwear, wood, plastics and their products, with a validity period of two years. Among them, textiles, clothing, footwear and other products are subject to a 35% temporary import tariff, and round steel with a diameter of less than 14 mm is subject to a 50% temporary import tariff. Mexico’s Economy Minister stated that this tariff adjustment aims to “prevent unfair competition” because a large number of products enter Mexico at low prices, which have an impact on domestic producers. These cheap imported products mainly come from countries that have no trade agreements with Mexico.​

At the end of 2024, the Mexican government issued a series of new trade policies, deciding to impose an additional 35% import tariff on more than 100 kinds of imported textiles and a 16% VAT on cross-border e-commerce platforms. On January 1, 2025, Mexico’s Tax Administration Service introduced a new tariff policy, imposing a 17%-19% tariff on small-value goods imported through courier companies. Specifically, goods entering Mexico from countries that have not signed international treaties with Mexico through courier companies are subject to a 19% tariff; goods entering through Canadian and American courier companies with a value of 50-117 US dollars are subject to a 17% tariff; goods from other countries that have signed international treaties with Mexico with a value of more than 1 US dollar are also subject to a 19% tariff. The Mexican side said that the new policy is mainly to prevent the import of some tax-evading products, strengthen the “crackdown on abuse”, ensure a fair competitive environment for Mexican companies, and protect employment in related industries.​

In addition, against the backdrop of complex and changing international economic and trade relations, Mexico is also facing tariff pressures from abroad. For example, adjustments in U.S. trade policies have had a significant impact on Mexico. In 2025, the United States announced that it would impose a new 30% tariff on Mexican products exported to the United States starting from August 1. Although Mexico later negotiated with the United States in an attempt to protect border enterprises and employment, the uncertainty of U.S. trade policies still brought huge challenges to Mexico. Earlier, the United States suspended the import of live cattle from Mexico due to concerns about screwworm infestation. Coupled with the decline in U.S. domestic beef production, meat producers will rely more on beef imports from Brazil. In addition, the United States terminated the “Tomato Agreement” with Mexico on July 14, 2025, which led to a tariff of about 17% on Mexican tomatoes exported to the United States. According to data from the U.S. Department of Agriculture, in 2024, about 72% of fresh tomatoes in the United States were imported, of which about 90% came from Mexico. A previous report released by Texas A&M University showed that the import and sale of fresh tomatoes from Mexico provided approximately 47,000 full-time and part-time jobs in the United States. These series of events indicate that the trade relationship between the United States and Mexico is undergoing profound adjustments, and Mexico is facing many difficulties in coping with changes in U.S. tariff policies.​

Impact of Mexico’s Tariff Policy Adjustments on Different Industries​

Automotive Industry​

The automotive industry is one of the important industries in Mexico, and its development is closely linked to tariff policies. Mexico is the largest automobile supplier to the United States. In 2024, Mexico exported 2.8 million automobiles to the United States, accounting for 69.5% of its total output and nearly 20% of U.S. automobile imports. The value of auto parts exported by Mexico to the United States reached 40.89 billion U.S. dollars, accounting for 40% of U.S. imports of similar products. However, changes in U.S. trade policies have brought a huge impact on Mexico’s automotive industry.​

Since April 2, 2025, the United States has imposed an additional 25% tariff on imported automobiles and key parts, which has had a multi-faceted impact on Mexico’s automotive industry. In terms of production costs, after the new tariffs came into effect, the production cost of crossover vehicles increased by 4,000 U.S. dollars per vehicle, and the cost of electric vehicles produced in the United States may increase to 12,000 U.S. dollars per vehicle. In order to avoid cost pressures, automakers such as General Motors and Ford have had to reduce their purchases of Mexican parts and transfer high-value-added links back to the United States. For example, Nemak, a Mexican auto parts giant, whose aluminum cylinder heads account for more than 40% of the global market share, but under the new tariff policy, U.S. customers have required it to set up additional production lines in the United States. This has put Mexico’s painstakingly cultivated local supply chain at risk of fragmentation.​

At the industrial policy level, the “Mexico Plan” vigorously promoted by former Mexican President López intended to build an independent industrial chain and increase the proportion of local parts. But the new regulations equate “local manufacturing” with “being taxed”. If Mexican factories use domestic batteries or motors, it will increase the tariff cost of the entire vehicle. Under this distorted incentive mechanism, Mexico’s automobile industry is not only increasingly dependent on the U.S. market in terms of exports, but also has to rely more and more on U.S. products in terms of industrial chain and supply chain. In addition, from the perspective of foreign investment layout, Mexico’s geographical advantages are dissipating. Companies such as CATL and BYD once regarded Mexico as a springboard to enter the North American market, but the new tariff policy has greatly weakened this strategic value. An analysis of the amount of foreign direct investment (FDI) received by Mexico shows that although the amount of FDI has been on the rise during 2023 and 2024, the annual growth rate has begun to decline, from 18.8% and 8.3% during 2021 and 2022 to 0.4% and 1.1% respectively. In 2024, new projects accounted for only 8.6% of the FDI absorbed by Mexico, while 77.9% was reinvestment of profits from existing enterprises. This reflects the doubts of international capital about the long-term prospects of Mexico’s investment environment under the continuous threat of Trump’s “tariff butcher knife”.​

Agricultural Products Industry​

The agricultural products industry also occupies an important position in Mexico’s economy, and changes in tariff policies have a significant impact on it. Taking tomato exports as an example, the United States is the main export market for Mexican tomatoes. In 2024, about 72% of fresh tomatoes in the United States were imported, of which about 90% came from Mexico. However, the United States terminated the “Tomato Agreement” with Mexico on July 14, 2025, resulting in a tariff of about 17% on Mexican tomatoes exported to the United States. This move has put Mexican tomato export enterprises in a dilemma of rising costs and declining profits. For Mexican tomato growers, reduced orders may lead to unsalable agricultural products and a significant reduction in income.​

Another example is that the United States suspended the import of live cattle from Mexico due to concerns about screwworm infestation. This ban has had a negative impact on Mexico’s livestock industry. Breeders are facing problems of livestock backlog and price decline, and related industrial chains such as transportation and processing have also been affected. The Mexican government needs to take measures, such as strengthening animal disease prevention and control and expanding other markets, to alleviate the pressure faced by the agricultural products industry.​

Textile and Garment Industry​

The textile and garment industry is one of the industries in Mexico that is more affected by tariff policy adjustments. Since 2023, Mexico has repeatedly raised import tariffs on textiles and garments. In the policy that came into effect on April 23, 2024, textiles and garments were subject to a 35% temporary import tariff, and at the end of the year, an additional 35% import tariff was imposed on more than 100 kinds of imported textiles. These policies aim to protect the domestic textile and garment industry and prevent the impact of cheap imported products.​

On the positive side, high tariffs have increased the price of imported textiles and garments, which has to a certain extent improved the competitiveness of domestic products, helped promote the development of the domestic textile and garment industry, provided a more favorable market environment for related enterprises, and promoted industrial upgrading and technological innovation. However, on the other hand, high tariffs may also bring some negative effects. For textile and garment enterprises that rely on imported raw materials, rising costs may compress profit margins and affect the production scale and expansion plans of enterprises. In addition, if domestic textile and garment enterprises fail to effectively use the protection period to improve their competitiveness, they may face more fierce market competition once the tariff policy is adjusted in the future.​

Cross-border E-commerce Industry​

Mexico’s tariff policy adjustments for cross-border e-commerce have also had a profound impact. At the end of 2024, Mexico imposed a 16% VAT on cross-border e-commerce platforms, and on January 1, 2025, imposed a 17%-19% tariff on small-value goods imported through courier companies. These policies are mainly aimed at countries that have not signed international treaties with Mexico, and Chinese cross-border e-commerce enterprises such as Shein and Temu have been directly affected.​

After the implementation of the new policy, the operating costs of cross-border e-commerce enterprises have increased significantly. On the one hand, the increase in tariffs and VAT has led to higher commodity prices, which may reduce consumers’ willingness to buy and affect the sales volume and market share of enterprises. On the other hand, enterprises need to invest more resources to deal with complex tariff policies and tax compliance issues, increasing the difficulty of operation and management. To cope with these challenges, cross-border e-commerce enterprises may need to adjust their supply chain layout, find more suitable logistics channels and tax planning schemes, or strengthen cooperation with local Mexican enterprises to reduce costs and improve competitiveness.​

Strategies to Address Mexico’s Tariff Issues​

Government Level​

For the Mexican government, in the face of the need to protect domestic industries and the pressure of international economic and trade relations, a series of measures need to be taken. First of all, when formulating tariff policies, full consideration should be given to the actual situation and long-term development needs of domestic industries to avoid excessive protection leading to a decline in industrial competitiveness. It can encourage domestic enterprises to carry out technological innovation and industrial upgrading by providing industrial subsidies and tax incentives, improve product quality and added value, and enhance their competitiveness in the international market.​

Secondly, actively carry out diplomatic negotiations, communicate and consult with trading partners, and strive for more favorable trade conditions. For example, in the face of the U.S. tariff threat, the Mexican government should stand firm, express its demands through diplomatic channels, and promote the two sides to resolve trade disputes on an equal and mutually beneficial basis. At the same time, strengthen economic and trade cooperation with other countries and regions, expand market space, and reduce dependence on a single market. Mexico can deepen the process of economic integration with Latin American countries, strengthen trade exchanges with Asia, Europe and other regions, and create broader market opportunities for enterprises by signing more free trade agreements.​

In addition, the government should strengthen the supervision of the domestic market, prevent enterprises from using tariff policies to engage in unfair competition, and maintain a fair market order. Establish a sound market monitoring system, keep abreast of market dynamics and enterprise operations, severely crack down on illegal acts, and protect the rights and interests of consumers and legitimate enterprises.​

Enterprise Level​

For enterprises affected by Mexico’s tariff policies, they need to formulate corresponding coping strategies according to their own conditions. For export enterprises, first of all, they should conduct in-depth research on Mexico’s tariff policies and related regulations, understand the applicable tariff rates and preferential conditions for their products, and reasonably plan the types and prices of export products. For example, if the products exported by an enterprise enjoy preferential tariff treatment in Mexico, it should ensure that relevant documents such as certificates of origin are complete to reduce tariff costs. At the same time, enterprises can improve product added value by optimizing product design and improving product quality, so as to offset the cost pressure caused by tariff increases to a certain extent.​

Secondly, enterprises can consider adjusting their supply chain layout. For enterprises that rely on imported raw materials, they can find more raw material suppliers, expand supply channels, and reduce the risk of fluctuations in raw material costs caused by tariff changes. Some enterprises can also consider establishing production bases in Mexico or cooperating with local enterprises, using local resources and policy advantages to achieve localized production, reduce import links, and avoid high tariffs. For example, some Chinese textile and garment enterprises can set up factories in Mexico, use local labor resources and preferential policies to produce products for the Mexican market, and at the same time radiate to other surrounding national markets through Mexico.​

In addition, enterprises should strengthen brand building and market development. By enhancing brand awareness and reputation, improve the market competitiveness of products and reduce dependence on prices. Actively explore other markets to reduce excessive dependence on a single market. For cross-border e-commerce enterprises greatly affected by Mexican tariffs, they can increase market promotion efforts in other countries and regions to find new consumer groups to make up for possible losses in the Mexican market.​

Industry Association Level​

Industry associations also play an important role in addressing Mexico’s tariff issues. Industry associations should strengthen communication and coordination with the government, timely reflect the demands and difficulties of enterprises in the industry, and provide reference for the government to formulate reasonable industrial policies and trade policies. For example, when Mexico raises import tariffs on some products, relevant industry associations can organize enterprises to conduct research, evaluate the impact of tariff adjustments on the industry, and put forward targeted suggestions to the government, such as adjusting the tariff structure and providing industrial support policies.​

At the same time, industry associations can strengthen industry self-discipline, standardize the market behavior of enterprises, and prevent vicious competition among enterprises. By formulating industry norms and standards, guide enterprises to improve product quality and service levels, and enhance the competitiveness of the entire industry. In addition, industry associations can also organize training and exchange activities for enterprises to help them understand Mexico’s tariff policies, market demands, laws and regulations, and improve their ability to cope with risks. For example, hold seminars on the interpretation of Mexican trade policies, invite experts to explain the changes in tariff policies and coping strategies for enterprises; organize experience sharing meetings among enterprises, let enterprises that have successfully coped with tariff issues introduce their experiences, and promote the common development of enterprises.​

Future Outlook on Mexico’s Tariff Issues​

The future direction of Mexico’s tariff policy will be affected by many factors. From a domestic perspective, the Mexican government’s industrial development strategy and economic growth goals will largely determine the direction of tariff policy adjustments. If Mexico continues to be committed to promoting domestic industrial upgrading and diversified development, it may continue to implement protective tariff policies on some key industries to support the growth of domestic enterprises. But at the same time, the government also needs to balance the relationship between protecting domestic industries and promoting international trade liberalization. Excessive trade protection may trigger retaliatory measures from trading partners, which will have a negative impact on Mexico’s overall economic development.​

At the international level, changes in the global trade situation and the development of Mexico’s relations with major trading partners are crucial. As​