President Claudia Sheinbaum published in the Official Gazette of the Federation (DOF) the tariff increases in Mexico on countries without trade agreements, which will come into effect on January 1.
The Mexican Congress raised tariffs on 1,463 tariff items to 50%, the same amount proposed by Sheinbaum, although it eliminated 123 and included 123.
Tariff increase in Mexico
The tariff items of the General Import and Export Tax Law and its amendments, not provided for in this Decree, will remain in force under the terms in which they were published in the DOF.
On the other hand, all provisions that conflict with the provisions of the Decree published on Monday are rendered null and void.
Regarding the tariffs that are the subject of this reform and with the aim of guaranteeing the supply of inputs in Mexico under competitive conditions, the Ministry of Economy may implement specific legal mechanisms and instruments for the importation of goods from countries with which the Mexican State does not have Free Trade Agreements (FTAs) in force.
With the changes, Mexican customs will increase the tariff from 20% to 50% on imports of cars originating in countries with which Mexico does not have trade agreements.
The Mexican Congress made the main tariff adjustment in the auto parts sector compared to the tariff increase initiative presented by President Claudia Sheinbaum.
The original proposal called for an increase in 141 auto parts classifications, but Congress eliminated 71 of these and included four, so that in net terms, the number of products was cut by almost half, to 74.
China and India
The Mexican Senate approved this key decree. In doing so, it reformed various tariff sections of the General Import and Export Tax Law. The objective: to establish tariffs on 1,463 products originating in countries without trade agreements, such as China, South Korea, India, Indonesia, and Brazil.
With this reform, the Mexican Congress imposed tariffs ranging from 5 to 50%. The measure is not insignificant. It impacts imports worth $52 billion, or 8.6% of total foreign purchases. Thus, the change redefines the rules of trade for hundreds of product classifications.
After Mexico’s Congress approved the tariff increase, the Chinese government protested, while India proposed a bilateral trade agreement.
The Secretary of Economy, Marcelo Ebrard, argued that China maintains many provisions in force, such as sanitary measures, that limit Mexican exports of primary goods, which are not considered an aggression.
In addition, Ebrard emphasized two additional arguments: the measure focuses on protecting the domestic market and Mexican industry and complies with World Trade Organization (WTO) rules.