Tariffs and trade in Mexico
Mexico introduces new tariffs on cars and auto parts for countries without a trade agreement
New tariffs have come into effect in Mexico as of January 1, 2026 applying to all countries it does not currently have a Free Trade Agreement (FTA) with, including China, Brazil and India. Passenger cars, auto parts and raw materials are amongst the goods that are subject to these new duties.
In December 2025, the Mexican Senate approved a package of new tariffs affecting the import of certain goods to Mexico from countries with which Mexico does not have an FTA, including including China, Brazil, South Korea, India and Russia. These new tariffs came into effect from January 1, 2026.
"The proposed tariffs are part of a programme to protect Mexico’s strategic industries… they’re aimed at products that we bring from countries with which we do not have free trade agreements… because when you have a free trade agreement you cannot impose such a tariff," said Marcelo Ebrard, Mexico's secretary of economy, in a translation of an official statement.
Ebrard went on to explain why passenger cars were specifically targeted in these measures. "One of the products that will be taxed are light automobiles, because they enter the country at prices below the reference price seeking to gain market share… The purpose of this is to ensure that we have production [in Mexico]," he said.
Figure 1: Mexico's new automotive-related tariffs in place from January 2026
| Category | Tariff rate | Applies to | Countries affected |
|---|---|---|---|
| Passenger cars | Up to 50% | Finished passenger vehicles (including petrol, diesel and electric vehicles) | Non-FTA countries (see Figure 2) |
| Powertrain and engine components | Typically 25%-35% | Engines, engine blocks, pistons, crankshafts, fuel injection systems, oil pumps, radiators and related components | Non-FTA countries |
| Transmission and drivetrain components | Typically 25%-35% | Gearboxes, clutches, torque converters, drive shafts, axles, differentials | Non-FTA countries |
| Electrical and electronic vehicle systems | Typically 15%-25% (some higher rates) | Wiring harnesses, alternators, starters, sensors, ECUs, ignition systems, vehicle lighting | Non-FTA countries |
| Chassis, suspension, braking systems | Typically 25%-35% | Suspension components, shock absorbers, springs, brake discs and pads, callipers, steering systems | Non-FTA countries |
| Body and structural components | Typically 25%-35% | Vehicle bodies (complete or incomplete), body panels, frames, bumpers, seat frames, airbags, seatbelts | Non-FTA countries |
| Interior and exterior fittings | Typically 15%-25% | Seats, dashboards, trim panels, mirrors, wipers, locks, handles | Non-FTA countries |
| Wheels, tyres, rubber components | Typically 25%-35% | Pneumatic tyres, inner tubes, wheels, rims, rubber hoses, belts, seals | Non-FTA countries |
| Metals used in vehicle production | Typically around 35% (varies by tariff classification) | Steel and iron products used in vehicle bodies, chassis, exhausts, structural components | Non-FTA countries |
As visible in Figure 1, the highest tariff rates in this new wave of measures are applied to passenger cars, with duties of up to 50%. These rates apply to finished ICE, hybrid and electric vehicles from countries without an FTA with Mexico. Tariff rates ranging between 15% and 35% apply to a range of auto parts, while raw materials including metals used in vehicle production are subject to tariffs of around 35%.
The 50% rate applied to cars imported from non-FTA countries represents the maximum tariff level Mexico can impose under World Trade Organization (WTO) legislation, having set a legally-binding 50% ceiling – or bound tariff – for passenger cars.
Figure 2: Non-FTA countries subject to Mexico’s higher tariff rates from 2026 (non-exhaustive)
| Continent | Countries (no Free Trade Agreement with Mexico) |
|---|---|
| Asia | China, South Korea, India, Taiwan, Thailand, Indonesia, Pakistan, Bangladesh, Sri Lanka, Philippines, Cambodia, Myanmar, Nepal, Laos |
| Europe | Russia, Ukraine, Belarus, Serbia, Albania, North Macedonia, Moldova, Bosnia and Herzegovina, Montenegro |
| South America | Brazil, Argentina, Venezuela, Paraguay, Guyana, Suriname |
| Central America and the Caribbean | Cuba, Haiti, Bahamas, Barbados, Trinidad and Tobago, Jamaica, Dominican Republic, Grenada, Saint Lucia, Saint Vincent and the Grenadines, Antigua and Barbuda, Saint Kitts and Nevis |
| Middle East | Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Oman, Bahrain, Iran, Iraq, Jordan, Lebanon, Yemen |
| Africa | South Africa, Egypt, Nigeria, Morocco, Algeria, Tunisia, Kenya, Ethiopia, Ghana, Angola, Tanzania, Uganda, Senegal, Côte d’Ivoire |
| Oceania | Papua New Guinea, Fiji, Solomon Islands, Vanuatu |
Figure 2 shows countries without an existing FTA with Mexico, which – from January 1, 2026 – are vulnerable to these higher tariff rates. Notable countries include China, Brazil, South Korea, India and Taiwan. Below, Automotive Logistics breaks down why each of these countries is significant to Mexico's automotive sector.
China a key trade partner for Mexico
Of all those countries affected by these new tariffs, the most significant without a doubt is China. In 2024, 13.9% of imported vehicle body parts and accessories to Mexico came from China, representing a total value of $899m. Behind the US, China was Mexico's second-biggest trading partner in 2024, in terms of both imports and exports of auto parts.
Additionally, Mexico’s vehicle imports from China in 2024 totalled $13.54 billion in value, making China also the second-highest value commercial origin of vehicles in Mexico that year.
More recently, data from the China Association of Automobile Manufacturers (CAAM), shared by the Association of European Vehicle Logistics (ECG), showed that as of September 2025, Mexico represents China's biggest export market, with 10% of total exports going to Mexico.
On December 22, 2025 – after the approval of the new measures by the Mexican Senate was announced – a spokesperson for China's Ministry of Commerce (MOFCOM) stated: "China has consistently opposed unilateral tariff hikes in any form. It is hoped that Mexico will promptly rectify this erroneous approach rooted in unilateralism and protectionism."
The spokesperson noted that the measures approved are based on a proposal from September 2025, and that while the approved version "includes certain adjustments, such as moderate reductions in the proposed tariff increases for some automotive parts", the newly implemented measures are likely to "cause material injury to the interests of relevant trading partners, including China".
Responding to reports that this latest tariff increase from Mexico is intended to serve the upcoming review of the United States-Mexico-Canada Agreement (USMCA), the MOFCOM spokesperson commented: "China welcomes the resolution of economic and trade differences between related countries through economic trade agreements, but any such arrangement must not come at the expense of global trade development or infringe upon China’s legitimate interests."
Important allies in South America
According to the United Nations COMTRADE database on international trade, Mexico imported $11.69 billion worth of vehicle products from Brazil in 2024. Data from the Mexican government also shows that Brazil was Mexico's biggest partner in South America for the import ($13.5m) and export ($64m) of vehicle body parts and accessories.
Although Mexico and Brazil do not currently have an FTA, trade negotiations between the two countries have been ongoing since September 2024.
As the Brazilian government is yet to publicly comment on Mexico's latest tariff package, it remains to be seen how this might impact trade negotiations between the two countries and what it might mean for the future of Mexico's position as a key trade hub between North and South America.
It is worth noting, however, that Brazil, Argentina, Paraguay and Uruguay will likely face less of an impact as a result of this tariff hike because of the Automotive‑Chain Economic Complementation Agreement (ACE55). This agreement, which entered into force in January 2003, was intended to promote automotive industry integration throughout the Mercosur trade bloc.
So while other goods may be subject to higher tariff rates, ACE55 should allow signatories to export automotive-related goods into Mexico with lower duties or no duties at all, shielding them from the brunt of the economic impact of these measures.
More key connections in Asia
In addition to China, several other Asian markets that play a significant role in Mexico's automotive supply chain will be affected by these tariff increases., having not agreed FTAs with Mexico to date. One of these markets is South Korea, from which Mexico imported 6.31% of all vehicle body parts and accessories in 2024, totalling a value of $406m.
Other valuable markets in Asia without an FTA include India, from which Mexico imported $26m worth of vehicle body parts and accessories in 2024, and semiconductor powerhouse Taiwan, from which it imported $50.9m worth of parts and accessories.
Adapting to tariff changes in the finished vehicle supply chain
Throughout 2025, fluctuations in tariffs and trade policy in North America meant OEMs needed to be flexible and agile, responding appropriately to any changes in order to minimise disruption. At the Automotive Logistics & Supply Chain Mexico conference last year, OEMs highlighted how they are having to come to terms with what revisions to vehicle tariffs mean for their business, not just for deliveries of vehicles made in Mexico to the US but for vehicles being delivered to Mexico from countries with which it does not have free trade agreements.
“That been very challenging – first to understand the implications and therefore to try to plan strategy according to that,” said Bernardo Taboada Cortina, head of logistics planning at VW de México at the event.
He noted that it is a fluid situation and claimed that VW de México has to decide from one week to the next whether to send vehicles or stop deliveries.
And just as tariff fluctuations can impact OEMs, so too can they affect their logistics partners. Also at ALSC Mexico 2025, Sergio Gutierrez, COO at Glovis America, discussed how Mexico's new market for Chinese vehicles has to be balanced with the established imported brands that Glovis is handling for sale in Mexico as well as the volumes it is helping export.
“At the end of the day we need to be very nimble and flexible,” said Gutierrez. “Every niche deserves the service and the quality.”
