Mexico’s tariffs on Chinese vehicles
Port congestion, competition pressures loom as Mexico set to increase tariffs on Chinese vehicle imports
Automakers in Asia and logistics firms around the world are grappling with uncertainty as they begin to prepare for the impact of an increase in Mexico’s tariff on Chinese vehicle imports from 20% to 50%.
This change was announced
in September by Mexico’s economy minister Marcelo Ebrard as part of
Mexico’s 2026 budget, which is currently pending legislative approval. As previously reported by Automotive Logistics, China
exported around 445,000 finished vehicles to Mexico in 2024, representing a 7% increase
on the previous year.
According to data from the government of Mexico, China was
the second highest value commercial origin of vehicles in Mexico in 2024 ($13.5
billion) behind the US ($25.7 billion).
Geopolitical implications
In response to news of Mexico’s planned tariff increases on
Chinese imports, a spokesperson for China’s Ministry of Commerce issued a
statement saying that it would “closely monitor” Mexico’s actions and “conduct
careful assessment” of any final measures. “In light of the global opposition
to the US’s widespread use of tariffs, countries should enhance communication
and coordination to jointly safeguard free trade and multilateralism, and must
not sacrifice the interests of third parties under external pressure,” the
spokesperson said.
In
this statement, the spokesperson also suggested that any unilateral tariff increases
implemented by Mexico would be seen as “appeasement and a concession to
unilateral bullying” that would harm China and other trade partners and “severely
undermine the certainty of Mexico’s business environment, diminishing investor
confidence”.
“China and Mexico are important
economic and trade partners, and we do not wish to see bilateral cooperation
adversely affected,” the spokesperson added. “We call on Mexico to exercise the
utmost caution and carefully weigh the potential consequences before taking any
action.”
Impact at Mexican ports
As Chinese exporters rush to get stock into Mexico before
additional tariffs come into effect, ports in Mexico are seeing a significant
increase in volumes. Data from Mexico’s Ministry of the Navy (Semar) shows that
the National Port System registered almost 6.3 million TEUs from January to
August this year, representing a 1.4% increase when compared to the same period
in 2024.
In August 2025 alone, the latest month on record, more than
850,000 TEUs were registered at Mexico’s ports – higher volumes than any other
month of the year so far, according analysis by T21 Business Intelligence. On
an individual port basis, the Port of Manzanillo also registered its highest
levels of the year in August with 346,249 TEUs, with volume handled at the port
in August having increased by 2.9% year over year.
The congestion issues at Mexico's ports may also be exacerbated by other issues, as was discussed as part of a panel discussion at Automotive Supply Chain & Logistics Global this year. "We have seen the for the last decade, [a] lack of investment in ports [and] in infrastructure, so that is causing some of the delays in the ports and the congestion," said Ana Lucia Ochoa Lorenzini, global director of supply chain management for the driveline division at tier one supplier American Axle Manufacturing.
Chinese OEMs adapt to US and Mexico tariffs
BYD, one of China’s biggest automakers, has already seen
tariffs impact its plans in the Americas, it seems. According to the Financial Times,
BYD first announced plans for a car plant in Mexico in 2023 and said the plant
would create 10,000 jobs and produce 150,000 vehicles a year. However, it
reported earlier this year that, according to two sources, progress was being
stalled as a result of delayed approval from China’s ministry of commerce as
trade uncertainty between China and the US persisted.
In
July, Bloomberg reported that BYD had shelved its plans for a plant in Mexico. "Geopolitical
issues have a big impact on the automotive industry," Stella Li, executive
vice president of BYD, was quoted as saying. "Now everybody is rethinking
their strategy in other countries; we want to wait for more clarity before
making our decision."
However, Li told Reuters
in September that “BYD hasn’t postponed any decision about a Mexico plant.” She
described Mexico as a “very relevant” market for the company, and clarified
that BYD’s proposed facility in Mexico would be intended to serve the Mexican
market rather than export to the US.
Recent research from Brookings has found that it is likely that Chinese products are circumventing US tariffs and
entering the US via Mexico and Canada. It found that from the introduction of
the US-Mexico-Canada Agreement in 2020 to 2024, the share of US GDP attributed
to trade with China dropped from 2.03% to 1.50%, while trade with Mexico grew
from 1.51% to 1.73% of US GDP in the same timeframe. Trade with Canada also
increased, from representing 1.26% of the US’ GDP in 2020 to 1.41% in 2024.
Uncertainty over trade in North
America has already impacted automotive logistics operations in Mexico. For
example, Tesla
paused its plans to build a new gigafactory in Mexico ahead of the US
election in 2024 – a project that has not seen any public developments since.
Despite uncertainty in the
region, several OEMs have reiterated that Mexico remains a strategic hub for the
automotive supply chain, with BMW having invested in the construction of a high-voltage
battery assembly facility next to its San Luis Potosí plant and
Renault
opening a new international logistics network (ILN) centre in Mexico this
year.
Parallels with trends in Europe
With tariffs on Chinese vehicle imports to Mexico expected to
come into effect next year, comparisons can be drawn with circumstances in Europe
over the past couple of years. In October 2023, the European Commission opened
an anti-subsidy investigation into imports of EVs from China. By the following
year, following the results of this investigation, duties were imposed on
Chinese manufacturers deemed to be importing “unfairly subsidised” EVs. A rate
of 17.0% was imposed on BYD, while Geely (18.8%) and SAIC (35.3%) were also
subject to duties.
In
response, BYD accelerated plans to produce vehicles in Europe, with plans
already in place for plants in Hungary and Turkey. Meanwhile, Geely issued a
statement expressing “great disappointment” in the decision, describing it as “not
constructive” and claiming it “may hinder EU-China economic and trade
relations, ultimately harming European companies and consumer interests.” SAIC,
according to reports, requested a hearing with the European Commission to
contest its decision.
“Protectionist tariffs, as
introduced by the EU to protect legacy European OEMs from cheaper Chinese EV
imports, are starting to work as intended,” observed Daniel Harrison, senior
automotive analyst at Automotive Logistics. “Companies such as BYD,
Chery and XPeng have not only built plants within Europe to circumvent those
tariffs, but they have developed extended supply chains within Europe to bring
down costs.”
He continued: “Mexico is
implementing planning to introduce similar tariffs of up to 50% on cars
imported from China, including EVs, to protect its domestic industry and also
limit its trade deficit with China.”
Speaking at the
Association of European Vehicle Logistics’ (ECG) annual conference this
month, the association’s president Wolfgang Göbel highlighted that the “scale
and speed of the dominance of the Chinese manufacturers… will probably
intensify from here on out”. This, he said, would create a “significant upside”
for China’s automotive industry “compared to a downside for basically everybody
else.”
