India is actively engaging with Mexico to discuss the implications of significant import tariffs recently approved by the Latin American country. These tariffs, which may reach as high as 50%, are set to take effect in 2026 and primarily target goods from nations without free trade agreements, including India. The discussions aim to explore a preferential trade agreement that would help safeguard bilateral trade interests, particularly as Indian exports valued at approximately $2 billion are at risk.
Mexico’s Tariff Hikes and Their Implications
The Mexican government has approved tariff increases on select imports from non-free trade agreement partners, including India and China. These tariffs, framed as a measure to support domestic industries and correct trade imbalances, will raise Most Favored Nation (MFN) import duties across 1,455 tariff lines, with rates ranging from 5% to 50%. This decision has raised concerns in India, where exports in sectors such as automobiles, textiles, and steel could be significantly affected. The proposal for these tariff hikes was initially introduced in September 2025, postponed to August 2026 due to industry concerns, and resubmitted in December 2025. Following approval from both houses of Mexico’s Parliament, the measure is now awaiting notification from the President.
Current Trade Dynamics Between India and Mexico
In 2024, the trade relationship between India and Mexico reached a total of $8.74 billion, with India enjoying a trade surplus of $2.72 billion. Indian exports to Mexico amounted to $5.73 billion, while imports were valued at $3.01 billion. Key exports from India include light vehicles, motorcycles, base metals, and textiles. Major imports from Mexico consist of crude petroleum oils, smartphones, and gold. The potential impact of the new tariffs could disrupt this balance, particularly affecting industries that heavily rely on exports to Mexico.
Indian Government’s Response and Ongoing Dialogues
The Indian government is closely monitoring the situation and has actively engaged with Mexican authorities to address the tariff revisions. In late September, the Indian Embassy raised concerns with Mexico’s Ministry of Economy, which clarified that the tariffs were not specifically aimed at India and reaffirmed its commitment to maintaining robust bilateral relations. Following this, a virtual meeting took place on December 2, 2025, between India’s Commerce Secretary and Mexico’s Vice Minister, where both parties agreed to pursue a trade agreement to mitigate the potential impacts of the tariffs. Technical discussions are set to begin on December 12, 2025, as part of these ongoing efforts.
Potential Risks and Future Outlook
A recent report from the Global Trade Research Initiative (GTRI) has highlighted the risks posed by Mexico’s tariff increases, suggesting they could significantly disrupt Indian exports starting January 1, 2026. The report indicates that this policy aligns with recent protectionist measures observed in the United States, signaling a shift towards supporting near-shoring and tighter North American supply chains. As India and Mexico navigate these challenges, the outcome of their discussions will be crucial in shaping the future of their trade relationship.
Digihunt is not a financial advisor and this is not investment advice.