Mexico tariff hike to weigh on Indian auto, aluminium exports: JM Financial

India's exports to Mexico could face pressure with auto, auto components and aluminium likely to be the most affected, following its decision to raise import tariffs on goods from nations without a free trade agreement, according to analysts at JM Financial.

 

Last week, Mexico approved a bill to raise tariffs on more than 1,400 imported goods from Asian countries, effective 1 January 2026, with China expected to be the most affected, according to Bloomberg.

 

The revised tariffs will range between 5 per cent and 50 per cent, with most products facing duties of up to 35 per cent. The bill passed with 76 votes in favour, five against and 35 abstentions. 

 

JM Financial said the move is expected to impact a wide range of products, including automobiles, auto components, steel, aluminium, textiles and plastics. 

 

In the financial year 2025 (FY25), India’s exports to Mexico stood at $5.7 billion, accounting for 1.3 per cent of India's total exports, making Mexico the 21st largest export destination for the country.

 

The top six commodities exported from India to Mexico in FY25 were auto and auto components, electronics, machinery, organic chemicals, aluminium, and iron and steel. Auto and auto components formed the largest share at 33.8 per cent of exports to Mexico, followed by electronics at 12 per cent, JM Financial said.

 

Other key categories included machinery at 9.5 per cent, organic chemicals at 6.8 per cent, aluminium at 6.7 per cent, and iron and steel at 5.3 per cent.

 

Among these, auto and auto components and aluminium are likely to be the most affected, JM Financial noted. Mexico is the second-largest export destination for Indian auto and auto components and the fourth-largest destination for Indian aluminium.

 

JM Financial added that the tariff hike may be aimed at addressing concerns from the United States, Mexico's largest trading partner, ahead of the scheduled review of the United States-Mexico-Canada Agreement in 2026. Several countries have been routing exports to the United States via Mexico to bypass recent US tariffs, and the new measures could be intended to curb such practices, the report said. 

 

According to Reuters, the Society of Indian Automobile Manufacturers (Siam) had urged the commerce ministry in November to press Mexico to “maintain status quo” on tariffs for vehicles shipped from India, according to a copy of the letter.

 

The majority of shipments from India to Mexico are compact cars with an engine size of less than one litre. Of the 1.5 million passenger vehicles sold in Mexico each year, about two-thirds are imported, and India's shipments make up just about 6.7 per cent of the total sales.