In a bold move to protect its industries, Mexicos Senate has greenlit tariffs as high as 50% on imports from India and other Asian nations lacking free trade agreements, set to take effect January 1, 2026. The decision targets over 1,400 product categories, putting roughly $1 billion of Indias exports—out of $5.3 billion annually—at immediate risk, with the automotive sector facing the heaviest fallout.​

The policy comes amid rising global trade tensions, as Mexico aligns with U.S. pressures under President Trump to reduce dependence on non-FTA suppliers like India and China ahead of the USMCA review. President Claudia Sheinbaums government frames it as essential for safeguarding local jobs in manufacturing hubs, though economists caution it may drive up prices for Mexican consumers and disrupt supply chains.​

Indian carmakers, who ship compact vehicles ideally suited to Mexicos roads, stand to lose the most. Volkswagen tops the list with nearly $500 million in exports from its Indian facilities, trailed by Hyundai ($200 million), Nissan ($140 million), and Maruti Suzuki ($120 million)—together accounting for about 6.7% of Mexicos car market. These duties leap from the prior 20% baseline, potentially forcing firms to redirect shipments to markets like the Middle East or absorb losses short-term.​

Beyond autos, textiles, steel, plastics, aluminum, footwear, electrical gear, and machinery face hikes up to 35-50%, hitting another $1.7 billion in trade where India dominates shares. Sectors like tractors and certain metals might hold up better due to Mexicos limited domestic options.​ As India eyes Latin America for growth—Mexico ranks third for its car exports after South Africa and Saudi Arabia—this tariff wall underscores the perils of protectionism. Exporters are urging New Delhi for swift diplomacy, including reviving stalled FTA talks, while scouting alternatives to dodge overreliance on volatile partners.

Disclaimer: This image is taken from India Today.