On September 10 local time, the Mexican government announced plans to significantly increase tariffs on key imported goods from "countries without trade agreements," aiming to boost domestic industries and reduce dependence on Asian imports. Mexican Economy Minister Marcelo Ebrard stated that the relevant proposal has been submitted to Congress. According to reports, import vehicle tariffs will be raised to a maximum of 50% under this adjustment.

Multiple industry experts indicate that as Mexico's largest automotive import source, China's automakers will face severe impact from the 50% tariff, with Mexico's move widely viewed as succumbing to US pressure.

**Import Tariffs Could Rise to Maximum 50%**

Currently, Mexico imposes import tariffs of 15% to 20% on Chinese light vehicles. The Mexican Ministry of Economy noted that this tariff adjustment covers multiple industries including textiles, steel, and automotive, with varying degrees of tariff increases expected to affect imports totaling $52 billion.

According to the draft proposal, over 1,400 product categories will be affected, including imported automotive components. Mexican Ministry of Economy documents show the new tariffs primarily target countries without free trade agreements with Mexico, including China, South Korea, India, Indonesia, Russia, Thailand, and Turkey.

"Currently we impose tariffs of up to 20% on Chinese imported vehicles, and we will raise tariffs to the highest level within the allowable range," Ebrard stated. "Without a certain degree of protection, Mexico's automotive industry can hardly compete with China." He emphasized that the tariff measures will be implemented within World Trade Organization (WTO) regulations, primarily aimed at protecting Mexican jobs, as Chinese vehicles enter the local market at prices "below Mexico's reference prices."

Notably, earlier this year, Ebrard had opposed tariff measures, claiming they were detrimental to economic growth and inflation control.

Mexican Electric Vehicle Association President Eugenio Grandio noted that Mexico had already raised tariffs on Chinese-manufactured electric vehicles from 0% to 15% last year, and may now increase them to 50%. In his view, 50% is a very aggressive tax rate that will "absolutely change the game."

Canadian Automotive Parts Manufacturers' Association President Flavio Volpe stated that the Trump administration would "highly favor" Mexico's new tariff policy, as it would make it easier for US automakers to compete with companies like BYD Co., Ltd. in Mexico.

Regarding the motivation for raising tariffs, Americas Market Intelligence Managing Director John Price analyzed that Mexico is responding to US pressure on one hand, while protecting its domestic economy on the other. Additionally, Center for Strategic and International Studies (CSIS) Senior Advisor Mariana Campero acknowledged: "The US will not allow China to use Mexico as a 'back door' into America."

Regarding Mexico's potential tariff increases, Chinese Foreign Ministry spokesperson Lin Jian stated at a regular press conference on September 11 that China has always advocated for inclusive economic globalization, opposes all forms of unilateralism, protectionism, and discriminatory exclusionary measures, and firmly opposes restrictions on China under various pretexts due to coercion by others, which damages China's legitimate rights and interests. China will resolutely defend its own rights and interests based on actual circumstances.

Lin pointed out that China and Mexico are both important members of the Global South, and mutual benefit and win-win cooperation is the essential characteristic of China-Mexico economic and trade cooperation. China highly values the development of China-Mexico relations and hopes Mexico will work with China to jointly promote world economic recovery and global trade development.

**China's Largest Auto Export Market**

China Automobile Dealers Association Passenger Car Committee Secretary-General Cui Dongshu believes these tariffs will have a certain impact on China's automotive industry. He stated: "Mexico is a major global automotive production base with a high proportion of automotive and parts imports. Tariff increases will inevitably affect the competitiveness of Asian exports."

China Chamber of Commerce for Import and Export of Machinery and Electronic Products Automotive Internationalization Professional Committee Secretary-General Sun Xiaohong told reporters: "The tariff increase involves automotive and parts in three main tiers: 50%, 35%, and 10%, with most falling under the 50% tier, which will have significant impact. According to customs data, from January to July this year, China exported 322,000 complete vehicles (including CKD kits) to Mexico, ranking first."

Currently, Mexico has replaced Russia as China's largest automotive export destination. Meanwhile, Chinese vehicles' share in Mexico's imported car market continues to rise, currently holding the largest market share.

As is well known, benefiting from its superior geographical location, especially its proximity to the US market, combined with multiple free trade agreements including the USMCA, plus mature automotive industry chain advantages, Mexico has become an important global automotive producer and parts supplier. Many automakers including BMW, Audi, Ford, General Motors, Mercedes-Benz, Nissan, and Tesla Motors have established factories in the country.

The Mexican Automotive Industry Association (AMIA) predicts that by 2025, Mexico could rank among the world's top five automotive producers, following Germany.

Multiple Chinese automakers including MG, JAC, Chery, and BYD Co., Ltd. are actively expanding in the Mexican market. Particularly under the electrification wave, Mexico has become one of the important destinations for Chinese electric vehicle overseas expansion.

BYD Co., Ltd. is a typical example. Since entering the Mexican market at the end of 2023, sales have maintained explosive growth. In 2024, BYD Co., Ltd. sold approximately 40,000 electric vehicles in Mexico, accounting for nearly half of the country's total EV sales. From January to August this year, BYD Co., Ltd.'s sales in Mexico doubled, exceeding 80,000 units.

Now, tariff policy changes may alter all of this. Partner Yu Le from Qinmai Enterprise Management Consulting (Shanghai) Co., Ltd. told reporters: "This policy adjustment has a direct and significant impact on Chinese automakers. It directly undermines Chinese automakers' original 'indirect approach' strategy. Many Chinese OEMs originally planned to adopt a 'Chinese-made key components + Mexican final assembly' model when investing in Mexican factories to circumvent high tariffs in North America. However, after the new policy implementation, this path is essentially blocked. Additionally, starting from early 2025, uncertainty factors in the North American investment environment have increased dramatically, and several Chinese automakers that originally planned investments have suspended or adjusted their Mexican factory construction plans."

Currently, Chinese automakers mainly expand into the Mexican market through imports. In comparison, parts suppliers have faster localization pace. Previously, many Chinese parts suppliers followed Tesla Motors into Mexico, beginning deep deployment in North America's automotive industry chain core region. These suppliers cover multiple segments including battery materials, automotive electronics, chassis systems, and interior/exterior components.

Multiple overseas analysts point out that Mexico's new tariff policy will mainly affect electric vehicles manufactured in China and sold in Mexico, such as BYD Co., Ltd. and Tesla Motors, and may impact Mexico's rapidly growing electric vehicle market. In comparison, the Big Three traditional US automakers with production facilities in Mexico - General Motors, Ford Motor, and Stellantis Group - will not be affected by the new tariff policy.

**Localization Becomes Unavoidable Option**

It is widely viewed that Mexico's plan to impose tariffs up to 50% on Chinese and other countries' vehicles and products represents succumbing to US pressure. However, Mexican President Sheinbaum argued that the country has no intention of conflicting with other nations and denied that tax increases are to "please the United States."

China is Mexico's second-largest global trading partner, while Mexico is China's second-largest trading partner in Latin America. The Mexico-China Chamber of Commerce called on the Sheinbaum government to reconsider the taxation in a statement.

So, do Chinese automakers have no opportunities in Mexico? "Not necessarily, but the only way out is to implement localized production according to USMCA compliance requirements. However, in our process of serving Chinese companies expanding overseas to Mexico, we deeply understand that Chinese companies face enormous challenges in localized production. For Chinese automakers, the biggest obstacles are often not production itself, but supply chain systems, after-sales networks, and market barriers. Among these, after-sales service is one of the most criticized aspects of Chinese brand vehicles in Mexico. Few repair outlets and insufficient parts inventory lead to excessively long repair waiting times for car owners, seriously affecting consumer experience. Some Mexican local insurance companies have even refused to insure certain Chinese brand models due to repair difficulties and uncontrollable costs," Yu Le told reporters.

"Overall, if Chinese automakers are determined to enter the Mexican market, they must be prepared for long-term, large-scale investment. My recommendation is: either don't enter, or if you do enter, you must make thorough localized investment," Yu Le emphasized.

Regarding response measures, Sun Xiaohong also told reporters: "In the short term, export prices need to be recalculated, but a 30% tariff increase already exceeds companies' profit tolerance. In the medium term, consultation can be conducted through government channels based on WTO rules and most-favored-nation treatment principles. In the long term, companies need to shift from simple exports to a 'trade + investment' model, considering establishing local production facilities in Mexico."