Mexico Raises Import Duty on Cars, Automotive Components: Indian Industry Likely to Feel Impact

The Government of Mexico has moved to impose import duties of between 5 and 50 percent on over 1,000 products including automobiles and automotive components manufactured in Asia. While the legislation largely targets China, exports from India will also be subject to the new tariffs when they go into effect on Januart 1, 2026. In addition to the automotive industry, electrical parts, machinery, chemicals, and metals will also be affected. 

Mexico is India’s third-largest automotive export market, but even so, only 3.6 percent of the Latin American nation’s car imports come from the subcontinent. Tariffs on cars will rise from 20 percent to 50 percent. India and Mexico do not currently have any trade agreement, and India currently enjoys a multi-billion dollar trade surplus. Automakers, particularly Volkswagen, Hyundai, Maruti Suzuki, Nissan, Honda, Royal Enfield, and Bajaj Auto are likely to be particularly affected, as Mexico is a key export market for them. The dollar value of total automotive industry exports from India has exceeded $1bn for the past five years, according to government data. 

Reuters reports that SIAM, the Society of Indian Automobile Manufacturers, attempted to head off the tariffs last month, urging the Government of India’s Commerce Ministry to enter negotiations to prevent the proposal from passing. It is possible that negotiations between the two countries will still take place to carve out exemptions or otherwise reduce the scope of the tariffs.

ACMA, the Automotive Component Manufacturers Association of India, has also commented that the new import duties will impact India’s supply chain industries, with Mexico-based carmakers importing powertrain parts, precision forgings, chassis and brake components, and even aftermarket products. A PTI report says the industry body is hopeful that dialogue between the two countries will help keep trade stable and growing.