India and Mexico Negotiate Amid Tariff Hike Concerns

India is actively negotiating with Mexico regarding the latter’s unilateral decision to increase tariffs on a variety of products. This move, which affects countries without free trade agreements with Mexico—including India, China, South Korea, Thailand, and Indonesia—could significantly impact Indian exporters. An official statement released on Saturday emphasized India’s intention to seek mutually beneficial outcomes while retaining the right to protect its exporters’ interests.

The proposed tariff hikes, which were approved by Mexico’s Senate on December 11, 2025, are set to impose import duties ranging from approximately 5 percent to 50 percent on around 1,463 tariff lines. The actual list of affected products will be officially announced soon, with the increased tariffs scheduled to take effect on January 1, 2026.

Diplomatic Engagements and Future Trade Agreements

Engagement between the Indian government and Mexican authorities has been ongoing since the initial proposal was introduced. The Indian Embassy in Mexico raised concerns with Mexico’s Ministry of Economy on September 30, 2025, advocating for special concessions to protect Indian exports from the impending tariff increases.

The official stated, “India values its partnership with Mexico and stands ready to work collaboratively toward a stable and balanced trade environment that benefits businesses and consumers in both countries.” Furthermore, both nations are exploring the possibility of initiating discussions for a free trade agreement (FTA). The terms of reference for these negotiations are expected to be finalized shortly, with experts suggesting that an FTA could mitigate the impact of the new tariffs on Indian exporters.

High-level talks have already occurred, with Rajesh Agrawal, Secretary of Commerce for India, meeting with Luis Rosendo, Mexico’s Vice Minister of Economy. Follow-up technical discussions are anticipated soon.

Economic Implications and Industry Concerns

The Indian government has expressed its reservations about unilateral tariff increases, indicating that such actions do not align with the principles of predictability and transparency that underpin the multilateral trading system. An official mentioned, “India reserves the right to take appropriate measures to safeguard the interests of Indian exporters while continuing to pursue a solution through constructive dialogue.”

The potential effects of these tariffs on Indian exports will largely depend on the significance of Indian goods within Mexico’s domestic supply chains, as well as exporters’ efforts to secure exemptions or adjust costs.

According to Ajay Sahai, Director General of the Federation of Indian Export Organisations, there are serious concerns regarding sectors such as automobiles, machinery, pharmaceuticals, textiles, and plastics. “Such steep duties will erode our competitiveness and risk disrupting supply chains that have taken years to develop,” he stated, highlighting the urgency for India and Mexico to expedite a comprehensive trade agreement.

The Automotive Component Manufacturers Association (ACMA) also warned that domestic auto component manufacturers are likely to face increased cost pressures due to the new tariffs. In the fiscal year 2024-25, India’s exports to Mexico amounted to USD 5.75 billion, while imports from Mexico were valued at USD 2.9 billion.

With the stakes high, both nations are keen to navigate this complex situation in a way that maintains their economic relationship while addressing the pressing challenges posed by the new tariff regime.