On August 15, 2023, the President of Mexico signed a decree, starting from August 16, the increase in steel, aluminum, bamboo products, rubber, chemical products, oil, soap, paper, cardboard, ceramic products, glass, electrical equipment, musical instruments and Most-favored-nation tariffs on a wide range of imported products, including furniture.
The decree increases import duties applicable to 392 tariff items. Almost all products in these tariff lines are now subject to the 25% import duty, and only certain textiles will be subject to the 15% duty. This modification of the import tariff rate came into effect on August 16, 2023 and will end on July 31, 2025.
Regarding the products with anti-dumping duties listed in the decree, stainless steel from China and Taiwan; cold-rolled plates from China and Korea; coated flat steel from China and China Taiwan; Imports such as seam steel pipes will be affected by this tariff increase.
The decree will affect trade relations and the flow of goods between Mexico and its non-FTA trading partners, the most affected countries and regions including Brazil, China, Taiwan, South Korea and India. However, countries with which Mexico has a free trade agreement (FTA) are not affected by the decree.
Since the tariff increase comes without warning, and the official language of Mexico’s announcement is Spanish, Chinese companies that use Mexico as their export market and transfer investment destination will be hit to a considerable extent.
Mexico is China’s second largest trading partner in Latin America; China is Mexico’s second largest trading partner in the world. There is huge potential for economic and trade cooperation between the two countries. Since the Sino-US economic and trade frictions began in 2018, the global supply chain has undergone profound changes. Regional free trade policy arrangements such as CPTPP and USMCA have also promoted the increasing cross-border investment transfer of Chinese enterprises to Mexico. Mexico’s increase of import tariffs on China is not conducive to Mexico’s undertaking the transfer of China’s industry and supply chain.