The Mexican government has introduced tariff adjustments as part of a broader strategy to curb irregular trade practices and strengthen domestic manufacturing.
The Mexican government has raised import tariffs on textile products to as much as 35% to support local industries. Mexico’s Secretary of Economy, Marcelo Ebrard, announced this policy on December. Although it is not explicitly directed at any specific country, it is expected to significantly impact trade with China, Mexico’s primary textile supplier.
Under the new policy, import tariffs have increased to 35% for 138 Harmonized Tariff Schedule (HTS) codes covering finished textile products. Additionally, tariffs on 17 HTS codes related to textile inputs have risen to 15%. These measures are set to remain in effect until April 23, 2026.
The decree also imposes new restrictions on the temporary importation of certain textile and apparel products under the IMMEX program. Previously, IMMEX allowed companies to import goods duty-free for manufacturing or assembly before re-exporting them. The new regulations limit this benefit for goods classified under Chapters 61, 62, and 63, as well as specific subheadings of the Tariff of the Law of General Import and Export Taxes.
Context: Rising Textile Imports and Market Competition
According to the National Chamber of the Textile Industry (CANAINTEX), from January to November 2024, Mexico imported $12.39 billion in textile and apparel products—a 14% increase from the same period in 2023. Data from Mexico’s Secretariat of Economy shows that China was the leading textile import source in 2023, accounting for $4.62 billion in imports, followed by the United States with $3.21 billion.
These statistics highlight the rationale behind the tariff hike. The Mexican textile sector has long raised concerns over unfair trade practices, particularly from Chinese suppliers who allegedly circumvent tax payments to gain a competitive edge over local manufacturers.
The tariff increase applies to imports from all countries with which Mexico does not have a free trade agreement. The measure also coincides with heightened trade tensions between Mexico and the United States. President-elect Donald Trump has accused Mexico of allowing Chinese products to enter the U.S. market without paying proper tariffs. This latest policy move aligns with President Claudia Sheinbaum’s broader strategy to mitigate potential sanctions and trade disputes with Mexico’s primary economic partner.
Trump Imposes Duties on Mexico
Donald Trump signed an executive order imposing a 25% tariff on imports from Mexico in February.
“Today’s tariff announcement is necessary to hold China, Mexico, and Canada accountable for their promises to stop the flood of deadly drugs into the United States,” the White House stated in a post on X. Trump justified the tariffs under the International Emergency Economic Powers Act (IEEPA), arguing that illegal immigration and the influx of fentanyl pose a severe national security threat to the US.
This week, Trump informed the media that the 25% tariffs on imports from Mexico and Canada along with a 10% tariff on Canadian oil—which was postponed for 30 days following discussions with their leaders in early February—will go into effect with “no room” for negotiations.
Protecting Domestic Industry: Perspectives from the Business Sector
The Mexican government has justified the tariff increase as a necessary measure to protect the domestic textile industry, contributing nearly 2% of the country’s GDP. The sector has faced prolonged challenges, with eight consecutive quarters of decline and the loss of approximately 70,000 jobs.
The Confederation of Industrial Chambers of Mexico (CONCAMIN) has praised the tariff adjustment, calling it a “major step forward” in defending national production. Business leaders argue that unfair competition from imported textiles has eroded the local market, putting Mexican manufacturers at a disadvantage.
Mexico’s textile sector thrived for decades, benefiting from competitive labor costs and proximity to the U.S. market, particularly following the 1994 implementation of the North American Free Trade Agreement (NAFTA). However, China’s entry into the World Trade Organization (WTO) in 2000 reshaped the competitive context, increasing pressure on Mexican manufacturers and contributing to a prolonged decline in domestic production.
Additionally, the new decree raises tariffs on unfinished textile products to 15%. This measure aims to limit the entry of semi-processed goods that later enter the Mexican market without proper taxation, but it has also raised concerns among local manufacturers. Many Mexican textile companies rely on imported raw materials from China, and the increased costs of these inputs could lead to higher production expenses and, ultimately, increased prices for consumers.
Stronger Controls on Asian Imports
While the Sheinbaum administration insists that the tariff increase does not respond to external pressures, the political and economic context suggests otherwise. Former U.S. President Donald Trump has repeatedly criticized Mexico for allegedly facilitating the entry of Chinese products into the United States without proper taxation. Canadian Prime Minister Justin Trudeau has also urged Mexico to enhance its oversight of Chinese imports.
President Sheinbaum strongly refuted these claims: “The idea that Chinese goods are entering the US via Mexico without proper tariffs is incorrect.” At the same time, she has announced plans to substitute Chinese imports with domestically produced goods to boost local manufacturing in key industries.
The government’s stricter trade policies go beyond tariff hikes. In recent months, Mexican authorities have intensified enforcement against irregular Asian imports. One notable example was the recent seizure of 262,000 Chinese-origin products, valued at approximately 7.5 million Mexican pesos, which had allegedly entered the country unlawfully. Additionally, a central commercial hub in Mexico City that served as a distribution point for these goods was shut down.
Future Regulations and Potential Trade Consequences
Protectionist policies are not new in Mexico. In April 2023, then-President Andrés Manuel López Obrador temporarily increased tariffs on Asian products to reduce Mexico’s trade deficit with China. According to China’s General Administration of Customs, this trade imbalance had surpassed $104 billion by the end of 2023.
Looking ahead, Mexico may extend these restrictions to other industries, including e-commerce. Sheinbaum has not ruled out imposing new regulations on Chinese e-commerce platforms like Shein and Temu. While specific details remain unclear, new legislation targeting these companies is expected in the coming year.
The revised tariff structure could also create tensions within the United States-Mexico-Canada Agreement (USMCA). Washington has already expressed concerns about Mexico’s trade barriers across multiple industries. While the Sheinbaum administration aims to protect national industries, it must also carefully navigate these policies to avoid potential retaliatory measures from its key trade partners.
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Q&A
- Why has Mexico increased tariffs on textile imports? Mexico aims to protect its domestic textile industry from unfair competition, particularly from China, and address trade concerns raised by the U.S. government.
- Which countries are most affected by the new tariffs? The tariff increase impacts all countries without a free trade agreement with Mexico, with China being the most significantly affected supplier.
- How do these changes affect the Mexican manufacturing sector? While the tariffs benefit local textile producers, they also raise costs for manufacturers relying on imported raw materials, potentially leading to higher consumer prices.
- What additional measures is Mexico implementing to control imports? The government has intensified inspections, seized irregular imports, and closed distribution centers suspected of tax evasion.
- What are the potential trade implications for the U.S. and Canada? The new tariffs could strain relations under the USMCA, prompting the U.S. government to express concerns about trade barriers and potential retaliatory measures.
