Up to 50% Tariffs on Cars: Mexico Slaps "Tariff Bomb" on South Korea and China

High Tariffs Imposed on Non-FTA Countries
"Protecting 325,000 Jobs" as Official Reason
Tariffs Target Over 1,500 Items Including Automobiles and Steel
Move Seen as Aligning with U.S. Pressure on China

The Mexican government has decided to impose high import tariffs on countries with which it has not signed a Free Trade Agreement (FTA), including China and South Korea. While the official justification is the protection of domestic jobs, some interpret this measure as aligning with the Donald Trump administration's policy of pressuring China.

AFP Yonhap News

According to Reuters on September 10 (local time), the Mexican Ministry of Economy announced plans to adjust import tariffs on about 1,500 items, including automobiles, textiles, steel, and toys. This measure is part of a comprehensive overhaul of import tariffs, and it is expected to affect imports worth approximately 52 billion dollars.

Marcelo Ebrard, the Minister of Economy, stated at a press conference that “Tariffs are already in place, but we will raise them to the maximum level allowed by the World Trade Organization (WTO),” emphasizing that “Without a certain level of protection, competition is nearly impossible.” He specifically pointed out that Chinese automobiles are entering the Mexican market below the reference price, disrupting the market, and announced that tariffs of up to 50% would be imposed on automobiles from China and other Asian countries.

This plan requires parliamentary approval, but since the ruling party holds a majority, it is considered highly likely to pass. If the tariff hike passes the legislature, tariffs of 35% will be imposed on steel, toys, and motorcycles, and 10% to 50% on textiles. Tariffs of up to 50% will also be applied to auto parts, clothing, footwear, home appliances, paper and cardboard, glass, and cosmetics. The Mexican government expects that this measure will help protect approximately 325,000 jobs.

South Korea is also expected to be directly affected by this tariff increase. According to the Mexican Ministry of Economy, the countries that have signed FTAs with Mexico are the United States, Canada, the European Union (EU), Japan, Chile, Panama, and Uruguay. Reuters reported that the Ministry of Economy stated in a document, “The tariff increase will affect countries without FTAs, especially China, South Korea, India, Indonesia, Russia, Thailand, and T?rkiye.”

The Mexican government cites strengthening industrial competitiveness and protecting businesses and employment as the reasons for imposing these tariffs. However, experts believe that this move goes beyond simple industrial protection and is a decision made with the United States in mind. Minister Ebrard himself was negative about raising tariffs as recently as earlier this year.

The United States has repeatedly pointed out that China has been using Mexico as a “bypass route” to expand its exports. After North Korea, China, and Russia demonstrated closer ties, and as the Trump administration increased pressure on China, including restricting visa issuance, Mexico’s actions are seen as an attempt to align with the U.S. stance.

Mariana Campero, a researcher at the Center for Strategic and International Studies (CSIS) in the United States, said, “The United States will not tolerate China using Mexico as a ‘back door,’” adding, “Mexico’s trade deficit with China has doubled over the past decade, reaching 120 billion dollars last year.” Gabriela Siller, an analyst at Banco Base in Mexico, commented, “These tariffs are aimed at increasing tax revenue and making a good impression on President Trump at the same time.”

The United States and Mexico, together with Canada, are the largest trading partners under the United States-Mexico-Canada Agreement (USMCA). This agreement has effectively served as a protective shield, allowing Mexico to be largely exempt from reciprocal tariffs. However, the USMCA is scheduled for review next year.

It is also analyzed that Mexico’s significant trade deficit with China influenced the decision to raise tariffs. Mexico’s trade deficit with China has exceeded 113.1 billion dollars.