Which Sectors Mexico’s Tariffs Will Hit in India, And Why New Delhi Has Limited Options

Mexico’s Senate approved the new tariff measure on December 11, 2025, and it has since been cleared by both chambers of Congress.

The higher duties will take effect on January 1, 2026. Under the decision, Mexico will impose steep import tariffs—ranging from about 5% to as high as 50%—on a wide range of goods from countries that do not have free-trade agreements with it, including India, China, South Korea, Thailand and Indonesia.

The hikes target key sectors such as automobiles, auto parts, textiles, steel, plastics and clothing, with most products moving from earlier tariff levels of 0–15% to about 35%, and a few strategic items—especially steel—jumping to the maximum 50% duty.

For India, the measures affect nearly three-quarters of its $5.75 billion exports to Mexico in 2024-25, fundamentally altering the commercial logic of accessing the Mexican market.

Why Mexico Raised Tariffs
Mexico’s move is seen as aligning its trade policy more closely with recent US protectionist measures ahead of the scheduled review of the US–Mexico–Canada Agreement or USMCA. By raising tariffs on imports from non-FTA countries such as China and India, Mexico is signalling support for near-shoring and tighter North American supply chains, consistent with US priorities.

Mexico is recalibrating its trade stance early to avoid friction with the U.S. and strengthen its negotiating position during the upcoming USMCA discussions.

Sectoral Impact on India
Automobiles and auto components, India’s largest export segment to Mexico, will be among the worst affected.

• Passenger vehicles, with exports of $938.35 million in FY2025, face a tariff increase from 20% to 35%, sharply eroding price competitiveness in a market increasingly shaped by USMCA sourcing rules.
• The impact is even more severe for auto components, which accounted for $507.26 million in exports. Tariffs rise steeply from 10–15% to 35%, disrupting India’s deep integration into Mexico-based automotive supply chains that serve the US market. 
• Motorcycles, another Indian stronghold with exports of $390.25 million, see duties increase from 20% to 35%, threatening volumes, margins and brand presence for manufacturers such as Bajaj Auto, TVS Motor and Hero MotoCorp.

Electronics, Machinery and Metals Face Steep Barriers
The electronics and machinery sector faces an equally sharp setback. Smartphones, which recorded $284.53 million in exports to Mexico in 2024-25, earlier entered the country duty-free (0%). From January 2026, they will face a 35% tariff, effectively shutting the Mexican market for Indian handset exports.

Industrial machinery, India’s second-largest export category to Mexico at $547.99 million, will see duties rise from 5–10% to 25–35%, significantly raising landed costs and curbing demand for Indian capital goods in price-sensitive segments.

In metals, the tariff shock is particularly punitive. Aluminium exports worth $383.28 million face duties increasing from 5–10% to 25–35%, weakening India’s competitiveness against regional and USMCA-based suppliers. Iron and steel exports of $128.44 million are hit hardest: tariffs rise from 10–15% to 35% on long products and a prohibitive 50% on flat products, effectively closing the Mexican market to Indian steel exporters. Articles of iron or steel, valued at $176.87 million, see duties jump from 15% to 35%, discouraging further export growth.

Labour-Intensive Sectors Under Pressure
Labour-intensive sectors such as garments, textiles and ceramics are also heavily impacted. Garments and made-ups, with exports of $245.90 million, face tariffs rising from 20–25% to 35%, sharply reducing India’s competitiveness against suppliers from FTA countries. Textiles exports of $149.94 million see duties increase from 10–15% to 25%, while ceramic products, valued at $94.12 million, move from 10–15% to 25–35%, squeezing margins in construction and consumer markets.

For chemicals and plastics, the impact is significant but more nuanced. Organic chemicals, a $391.12 million export segment, face tariffs rising from 5–7.5% to 15–25%, compressing margins but allowing trade to continue in specialised products. Plastics and plastic articles, exported to the tune of $136.69 million, see duties rise from 10–15% to 25%, disproportionately affecting MSME exporters.

Pharma Largely Spared
Pharmaceuticals stand out as the lone relative exception. With exports of $197.48 million in 2024-25, tariffs remain broadly unchanged, moving only marginally from 0–5% to 0–10%, preserving Mexico as a stable market for Indian generic medicines.

Coffee, tea, mate and spices, valued at $36.45 million, face tariffs rising from 0–5% to 15%; exports may continue due to limited domestic substitutes despite higher retail prices.

India’s Likely Response
Mexico’s move makes it the second major economy after the United States to openly breach WTO tariff commitments, further weakening the multilateral trading system. By charging different tariffs to different WTO members, Mexico undermines the most-favoured-nation principle, even as similar actions by the US have gone largely unchecked.

The decision has drawn criticism from affected countries and industry groups—China has formally protested—and raised concerns about higher consumer prices and supply-chain disruption.

Despite this, India is unlikely to retaliate. Imports from Mexico total just $2.9 billion, roughly half the value of India’s exports, limiting leverage and the economic case for counter-tariffs.

Instead, New Delhi is expected to focus on export diversification, treating Mexico’s tariff hike as another sign of the accelerating erosion of global trade rules rather than a dispute to be fought bilaterally.