Mexico has decided to impose temporary import tariffs of up to 50% on 544 products, mainly targeting countries with which it has not signed trade agreements. Experts and analysts believe that Mexico’s move is aimed at filling gaps, with its main target being China; and geopolitical and geo-economic factors have also made it inevitable for Mexico to raise tariffs.
The Mexican government recently imposed new tariffs on hundreds of imported products from countries that it has not signed trade agreements with. In a decree published on April 22, the Mexican government stated that it will impose tariffs ranging from 5% to 50% on 544 products, including steel, aluminum, textiles, wood, footwear, plastics, chemicals, paper and cardboard, ceramics, glass, electrical materials, transportation materials, musical instruments, and furniture.
The decree went into effect on April 23, 2024, with a duration of two years. Products from countries that have signed trade agreements with Mexico will not be affected by the new tariffs. These countries include the United States, Canada, EU countries, Australia, Japan, Chile, and Vietnam.
Previously, Mexico announced an increase in import tariffs on products such as steel and aluminum on August 15, 2023, with rates ranging from 5% to 25%. This tariff increase is a further adjustment following the tariff hike in August 2023.
Mexico’s Minister of Economy, Raquel Buenrostro, stated at a public event that the Mexican government’s goal is to “prevent unfair competition.” She mentioned that many products enter Mexico at very low prices, displacing domestic Mexican producers. These concerning imports mainly come from countries without trade agreements with Mexico. Although she did not specifically mention China, she clearly stated that the “undervalued” imports predominantly come from Asia.
The Mexican government also stated that the new tariff decree aims to “maintain the competitiveness of the most sensitive industrial sectors, such as the electrical, electronic, automotive, and automotive parts” industries.
Mexican analysts believe that the country’s decision to impose new tariffs seems to primarily target China.
In the context of the US-China trade war, Mexico has been seen as a gateway for Chinese products to enter the US market. This Latin American country has also become a key destination for the US “nearshore outsourcing” policy, where businesses relocate production facilities closer to the domestic market.
Mexico is China’s second-largest trading partner in Latin America, and Mexico is China’s second-largest trading partner in the region. According to the General Administration of Customs of China, the total trade volume between China and Mexico reached $100.2 billion in 2023, with China’s exports totaling $81.5 billion and imports amounting to $18.7 billion. China mainly exports electronic components, kitchenware, and automotive parts to Mexico, while Mexico predominantly imports products like crude oil, electrical equipment, and medical instruments from China.
Data from the shipping platform Xeneta shows that container shipping volume between China and Mexico had an annual growth rate of 34.8% in 2023, significantly higher than the 3.5% increase in 2022.
Mike Sun, a senior Chinese investment strategist and private investment advisor, stated in an interview with a reporter from the Epoch Times on May 4 that Mexico’s move is aimed at China.
Sun mentioned that in recent years, especially after the trade war between former US President Trump and China, a large number of Chinese goods have flooded into Mexico through trade or investment. The purpose is to enter the US market through the North American Free Trade Agreement and enjoy tariff exemptions. Therefore, Mexico’s actions are evidently aimed at plugging loopholes, and the response is swift. He also noted that China has been playing a game of evading tariffs by disguising Chinese goods as products from Southeast Asia, bypassing tariff and quota systems. This practice has been ongoing for some time.
In the backdrop of the US-China trade war, Mexico has been viewed as a transit point for Chinese products to evade US tariffs, prompting Chinese companies to set up factories in Mexico. In recent years, many Chinese companies have relocated to industrial parks in northern Mexico. The Mexican Industrial Parks Association even stated that all available land in Mexico for development has been purchased by 2027.
By setting up factories in Mexico, Chinese companies not only benefit from production lines closer to the US market, saving on shipping costs, but more importantly, their products are viewed as 100% Mexican-made. This means that Chinese companies can circumvent US tariffs and sanctions on Chinese goods in the ongoing trade war between the United States and China.
Since 2022, a furniture company that established a large factory in northern Mexico has employed 450 workers, producing recliners and leather sofas labeled as 100% “Made in Mexico” and sold to major chain stores in the US. The company plans to triple or quadruple its local production capacity, increase its workforce to over 1200 employees in the coming years, and set up new production lines in the factory.
“Nearshore outsourcing” is seen as a beneficial pathway to the US, giving Mexico a crucial advantage in a time of global trade hostilities, providing a boost to the Mexican economy. This has positioned Mexico as a strategic foothold between the US and China, surpassing China to become the US’s largest trading partner.
On April 18, Mexican Economy Minister Buenrostro met with the Chinese Ambassador to Mexico, Zhang Run. Buenrostro expressed that Mexico welcomes Chinese investment, stating that the economic incentives implemented in Mexico will strengthen industrial chains and serve national industrial policies.
However, just four days after the meeting, Mexico introduced a decree amending general import and export tax laws on tariffs, surprising industry players. Some geopolitical and trade experts believe that Mexico’s imposition of tariffs between 5% and 50% is an attempt to avoid provoking the US.
In March, following an anti-dumping investigation, Mexico levied tariffs ranging from 3.68% to 12.35% on steel balls and nails imported from China, along with temporary compensation taxes as high as 31%, seen as a complementary measure under US pressure.
Under pressure from the US, the Mexican government has also decided to distance itself from Chinese car manufacturers, refusing to provide low-cost public land or tax incentives to facilitate investment in electric car production. Senior Mexican officials, in a meeting with Chinese automaker BYD in January, made it clear that they would no longer provide incentives to car manufacturers as they had done in the past, suspending any future talks with Chinese car manufacturers.
This move is attributed to pressure from the US government, particularly the US Trade Representative’s Office (USTR). The USTR requested excluding Chinese car manufacturers from the free trade area established under the North American Free Trade Agreement. These Chinese automakers used Mexico as a backdoor to sell cheap electric cars in the US without paying the current high tariff of up to 27.5%.
On April 17, US President Joe Biden announced various trade measures against China during a speech to steelworkers in Pittsburgh, including increasing import tariffs on Chinese steel and aluminum products, pressuring Mexico to prohibit China from selling steel and aluminum products to the US via Mexico, and initiating anti-dumping investigations into Chinese trade practices in shipbuilding, maritime, and logistics sectors.
Biden also mentioned that a US delegation had been sent to Mexico to negotiate with the Mexican President on these issues.
Wang He, a geopolitical analyst based in the US, told the Epoch Times reporter that Mexico plays a unique role in the global economic landscape: firstly, it shares a border with the US; secondly, it is part of the USMCA; and with the US driving a global supply chain reshuffle, Mexico has a historic opportunity, highlighting its value at this moment.
He pointed out that the US is the world’s largest importer, and its decisions on where to purchase goods impact the global trade landscape. China, in order to evade high US tariffs, chose to export goods to the US through Mexico. However, both the US and Mexico are aware of this situation. Currently, competition between the US and China is intensifying, with the US determined to cut off this route. The USMCA provides the US with a ready-made tool, and the three countries will decide whether to extend the agreement in 2026, prompting Mexico to align its position with the US on this issue.
“Given the current situation, it’s almost inevitable for Mexico to raise tariffs. Mexico is increasingly realizing its value in geo-economics and needs to play this card well,” Wang He said.
He further stated that signing the USMCA would be very disadvantageous for China because China does not hold market economy status, and any country without market economy status entering into agreements with Mexico must receive US approval.
He noted, “Therefore, China’s position in the global economy is very passive, unless US-China relations improve, both sides move towards cooperation rather than competition. With the US imposing blockades on China globally under this overarching trend, Mexico has no choice but to align with the US.”
（The reporter Ning Xin contributed to this article）