Auto Industry Raises Concerns Over Impact of Mexico’s Asian Tariffs

India’s automobile manufacturers and component makers have raised concerns over Mexico’s plan to increase tariffs on imports from Asian countries with which it does not have a free trade agreement, reports said. The concerns emerge at a time when India is already facing an aggressively high US reciprocal tariff of 50%.

The proposed tariff hike poses risks to India’s vehicle exports, prompting industry bodies to engage with the government. Members of the Society of Indian Automobile Manufacturers (SIAM) and the Auto Component Manufacturers Association (ACMA) recently met officials from the Ministry of Commerce and Industry over the development, The Economic Times reported. Companies such as Maruti Suzuki and Skoda Auto Volkswagen India export nearly 100,000 vehicles, around 12% of India’s total car exports, to Mexico annually. Mexico accounted for more than a fifth of Maruti Suzuki’s total exports of 330,000 cars in FY25, the report said, citing sources. Indian manufacturers exported 770,000 passenger vehicles last financial year.

Pharmaceutical companies planning to scale up operations in Mexico are also worried about the impact of the proposed tariff hike. Large drug makers such as Sun Pharma, Dr. Reddy’s, Glenmark, and Hetero already have operations in the country. “Currently, there are no tariffs on drugs made in India and any imposition of tariffs will hamper interest in that country,” the ET report said, citing a senior pharma executive.

Why Mexico Matters for India

Mexico is the third-largest export destination for cars from India, with exports totalling $887 million last year. South Africa remains the largest, followed by Saudi Arabia. Mexico is also the single largest market for Indian two-wheelers, with exports valued at $390 million, and the second-largest destination for three-wheelers at $51 million. It is also the third-largest market for Indian-origin auto parts. In FY25, Indian companies exported components worth $834 million.

Since 2018, Mexico has imported more from India while selling less, pushing its trade deficit with New Delhi to more than seven times the earlier level, widening from $1 billion in 2018 to $7.7 billion in 2024, according to a report by NDTV Profit. The deficit is expected to expand further as Mexican oil exports continue to decline.

“It (Mexico) is a significant export destination for manufacturers across categories in the automotive industry,” the report said, citing a senior official. “Any increase in tariffs will impact companies here adversely, more so in the current geopolitical environment. Auto component exports to the US are already under pressure after the tariff hike.”

What Is the Proposed Tariff Hike?

Mexican President Claudia Sheinbaum proposed in September to impose higher tariffs, ranging from 10% to 50%, on more than 1,400 categories of imported products including cars, auto parts, steel, toys, and furniture. However, media reports say the plan has been postponed until December as opposition has grown from local business lobbies and members of the ruling party.

“We are hopeful that at least India will not be impacted by these tariffs,” India’s ambassador to Mexico, Pankaj Sharma, said.

India Eyes Trade Boost With Mexico

Sharma said India is planning to strengthen trade ties with Mexico in software, pharmaceuticals, and IT, while hoping the Sheinbaum administration exempts imports from India from the proposed tariff increase on Asian goods. “Our trade is much below the potential that both countries have today,” Sharma said in an interview. “I think it is time that we focus on each other.”