Mexico Imposes 50% Tariffs on Indian Goods: Auto Sector Likely to Bear the Brunt

Following the United States, Mexico has also escalated trade pressure on India by imposing tariffs of up to 50% on over 1,400 products from countries without a trade agreement, including India and China. The new tariffs, effective next year, will affect a wide range of goods from textiles to auto components.

India’s trade surplus with Mexico stood at $2.8 billion in 2024-25, with exports totaling $5.7 billion against imports of $2.9 billion. Key Indian exports include cars, electric machinery, industrial machinery, organic chemicals, and aluminum. However, the newly imposed tariffs are expected to hit India’s auto sector the hardest.

Indian manufacturers such as Maruti Suzuki, Hyundai, and Royal Enfield export thousands of cars and bikes annually to Mexico. For example, nearly 90,000 vehicles are shipped each year, contributing approximately $1.1 billion to India’s exports. Auto components worth around $850 million are also exported, some of which support production for vehicles destined for the U.S. market.

Skoda Auto accounts for roughly 50% of India’s car exports to Mexico, followed by Hyundai, Nissan, and Suzuki. Despite the challenging environment, companies like Skoda Auto Volkswagen emphasize India as a critical manufacturing hub for global markets.

According to Vinny Mehta, Director General of the Auto Component Manufacturers Association, the tariffs will impact key components such as powertrain and driveline parts, precision forgings, chassis and brake systems, and major electrical and aftermarket products. While Mexico may gain approximately $2.8 billion in revenue from the tariffs, the move is largely seen as influenced by U.S. pressure under President Donald Trump.

Saurabh Agrawal, Tax Partner at EY India, noted that this development signals rising global trade tensions, potentially disrupting established supply chains and making Indian exports more expensive. Sectors likely to be most affected include automotive components, textiles, and engineering goods.

The new tariffs mark a significant challenge for Indian exporters, particularly in the automotive and machinery sectors, and could reshape India-Mexico trade dynamics in the coming years.