China’s exports to Mexico are getting heavier tariffs – is it a sign of more to come?
- Mexico has established new or higher tariffs on a long list of imports, directly affecting China and raising questions over what else could be in store
- Pressures mounting on Latin American country to limit its trade relationship with China, especially in role as ‘springboard’ to US market
New tariffs from Mexico could be an ill omen for Chinese exporters as global supply chains shift, with the Latin American country looking to balance its economic interests against
pressures from the US over its relationship with the Asian manufacturing powerhouse, analysts said.
Tariff hikes, levying 5 to 50 per cent in additional import costs, have kicked in for 544 products entering Mexico. The higher rates only apply to countries without free trade pacts with the Latin American country, which includes China – its second-largest trading partner and a growing source of shipments over the last two years.
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[The tariffs are] to provide certainty and fair market conditions to domestic industrial sectors that face vulnerability derived from practices that altered and affected international trade,” read a Mexican government statement from April 20 regarding the change.
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Affected products include steel, aluminium, textiles, clothing, musical instruments and furniture.
The tariffs present a new hurdle for Chinese businesses as they search for new export destinations, with traditional supply chains altered after escalations in economic tensions with the US.
Mexico has been seen as a “springboard” for Chinese products to
enter the American market since the beginning of the China-US trade war in 2018. The Latin American country has also become a prime destination for the US’ “nearshoring” policy, intended to relocate supply chains to neighbouring states.
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Annual growth in container shipping between China and Mexico increased by 34.8 per cent in 2023 compared to a 3.5 per cent jump in 2022, according to shipping data platform Xeneta. At the same time,
Mexico has overtaken China as the US’ biggest trading partner.
While the Mexican government said the new tariffs were intended to “balance changes in the market to avoid economic distortions” to its domestic industries, geopolitical and trade experts named pressure from Washington as another factor.
Deborah Elms, head of trade policy at Hinrich Foundation, said there is growing concern in Washington that the
growth in Mexico includes “Chinese goods that are not undergoing any manufacturing in Mexico, but only circumventing trade rules and tariffs”.
To help stop growing trade flows and – probably – demonstrate resolve to Washington, Mexico has started applying tariffs
Deborah Elms
She added that the US is wary of “undesirable goods” like
fentanyl and other illicit substances crossing borders as new trade routes settle in
With new tariffs being imposed by Mexico on most Chinese imports, observers and analysts disagree on whether stricter measures are being considered – but most say pressure from the US is at play.
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