Mexico Moves to Raise Tariffs on China, Bolstering US Ties
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The Mexican government plans to increase tariffs on China as part of its 2026 budget proposal next month, protecting the nation’s businesses from cheap imports and satisfying a longstanding demand of U.S. President Donald Trump.
The tariff hikes, expected for imports including cars, textiles and plastics, aim to shelter domestic manufacturers from subsidized Chinese competition, according to three people briefed on the matter, who asked not to be identified revealing details of the plans. Other Asian countries are also expected to face higher tariffs, one of the people said.
Specific tariff rates weren’t immediately clear, and the plan could change, the people said. The draft revenue proposal from President Claudia Sheinbaum’s administration is scheduled to be sent to Congress by Sept. 8.
While the budget plan will require approval from the legislative branch, Sheinbaum’s party and its allies hold two-thirds majorities in both houses, limiting likely changes by lawmakers. The president’s office and the Economy Ministry had no immediate comment. The Finance Ministry didn’t immediately reply to a request for comment.
Containers prepared for export at the Port of Veracruz. (Victoria Razo/Bloomberg)
The Trump administration since early this year has urged Mexican officials to raise duties on Chinese imports as the U.S. has done. Mexican officials subsequentlyÌıfloatedÌıthe idea of a “Fortress North America†that limits shipments from China while strengthening trade and manufacturing ties among the U.S., Mexico and Canada. U.S. Treasury Secretary Scott Bessent has expressed enthusiasm for the concept.
The nations are also preparing to review the free-trade deal between them, negotiated during Trump’s first term, by the middle of next year.
American pressure for Mexico, the nation’s largest trade partner, to stem the flow of cheap Chinese goods to the country is motivated in part by Trump’s accusation that the products are entering and then making their way north to the U.S. Trump gave Mexico a reprieve from higher tariffs last month after a call with Sheinbaum to allow more time for trade negotiations.
Mexico and the U.S. also are closing in on a deal to combat drug trafficking and violence. Trump has cited fentanyl trafficking as the reason Mexico is paying a 25% levy on goods that don’t fall under the nations’ free-trade pact. Addressing that issue in the new security deal would make it easier for negotiators to find common ground on other areas of conflict, such as tomatoes and steel.
Chinese Cars
The Mexican market for Chinese cars has exploded in recent years, with Mexico becoming the top global destination for Chinese vehicles this year, overtaking Russia, according to the China Passenger Car Association. While the vehicles face tariffs of as much as 20% in Mexico, that pales in comparison to the U.S., where former President Joe Biden added a 100% duty on Chinese EVs and banned most cars with software developed in China.
RELATED:ÌıUS Loses Top Spot in Canada’s Car Market to Mexico
Increased tariffs on China would boost Mexican revenue and help Sheinbaum’s push to find ways to rein in Mexico’s budget deficit, which reached the widest since the 1980s in 2024 as her predecessor spent heavily to complete flagship projects before leaving office. Her administration has pursued higher tax collection while pledging to avoid a major tax increase.
Sheinbaum’s government has sought to boost domestic industry through the so-called “Plan Mexico,†which focuses on industrial parks and public spending projects aimed at stimulating investment amid the uncertain trade environment. Sheinbaum has previously raised duties on some foreign goods, including textiles and direct-to-consumer clothing.
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