Mexican President Claudia Sheinbaum and Chinese President Xi Jinping meet at the G20 summit in Rio de Janeiro, Brazil, November 18, 2024. Photo: Li Xueren/Xinhua.
Mexico and China have entered a trade dispute following the approval of the new General Import and Export Tax Law, proposed by the government of President Claudia Sheinbaum.
The tariff changes, which Mexico supports and China opposes, were approved this week by the Mexican Congress, capping a year marked by US President Donald Trump’s global trade war. Trump has repeatedly threatened both Mexico and China with tariffs and has acknowledged his interest in diminishing China’s influence in Latin America.
According to Sheinbaum, the reform represents the prelude to the renegotiation of the free trade agreement between Mexico, the US, and Canada (known as the USMCA) that will begin next year.
Is the Mexican tariff reform against China?
The new law imposes tariffs of between 5% and 50% on the import of products from countries with which Mexico does not have free trade agreements and that until now paid maximum tariffs of 25%.
This means that it not only impacts China but also Brazil, South Korea, the United Arab Emirates, India, Indonesia, Nicaragua, Malaysia, Russia, Singapore, South Africa, Thailand, Taiwan, Turkey, and Vietnam, among other countries.
However, China is the most affected because, according to a report prepared by Mexican parliamentarian Ricardo Monreal, in the last two decades China has become the second-largest exporter to Mexico, after the US.
Last year, 20.8% of Mexican imports came from China, a figure surpassed only by the US with 40.1%.
Many analysts raise suspicions about Mexico’s tariff initiative, as it came just after Mexico began negotiations with the US to ease the tariff hike imposed by President Trump on Mexican exports. Some consider it a concession Sheinbaum made to avoid more aggressive US commercial and economic policies against her country.
The parliamentary process of the reform
The initiative, presented by Sheinbaum in September as part of the 2026 Economic Package and allegedly aimed at protecting domestic industry, imposes tariffs of up to 50% on 1,463 products belonging to 17 strategic sectors, including automotive, textiles, apparel, plastics, appliances, and footwear. These represent $52 billion in imports.
The parliamentary process was swift, with the bill being approved in the Chamber of Deputies in the early hours of Wednesday, December 10, and in the Senate hours later. It will come into effect on January 1, 2026.
Trade relationship between Mexico and China
According to official data, the trade balance between Mexico and China is negative for Mexico, as it sells only 1.44% of its total exports to China. Conversely, China accounts for 20.8% of Mexico’s imports.
This means that last year Mexico bought $129.14 billion worth of Chinese products but sold only $8.84 billion worth to its Asian partner.
The main products that Mexico buys from China, and which will now suffer higher import tariffs due to the new law, are telephones, machine parts and accessories, automobiles and auto parts—precisely the Chinese items that have spread across international markets.
On the other hand, Mexico sells China mainly copper ores and concentrates, as well as vehicle parts and accessories.
Moeover, foreign direct investment from China in Mexico reached $710 million last year.
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China’s protest
As soon as the law was passed, China’s Ministry of Commerce reiterated its long-standing opposition to “unilateral tariff increases” in all forms, urging Mexico to act prudently and rectify “incorrect practices” such as protectionism that imposes trade barriers.
“We will closely monitor the implementation of the Mexican measures and further evaluate their potential impact,” warned a spokesperson, who also noted that automotive exports from China to Mexico will be especially affected and will now have to pay higher tariffs.
Sheinbaum’s response
The Mexican president’s argument to justify the measure was that it was not taken solely against China but is part of a general trade policy to boost production in Mexico.
She also stated that there had been communication with the governments of South Korea and China to explain the initiative, which had undergone several changes from the original proposal. “We are fully prepared to continue working with the governments of China, Korea and other countries with which we do not have a trade agreement,” she said.
Sheinbaum referred in particular to the Mexican textile industry, which has been affected by imports since the COVID pandemic, and to the automotive industry, in which China plays a leading role.
“Our interest is not to create conflict with any country in the world. We have great respect for China and very good relations. The reason for these adjustments is to strengthen the national economy. So, the goal is to continue the dialogue,” she added.
(RT) with Orinoco Tribune content
Translation: Orinoco Tribune
OT/JRE/SC
