Mexico’s Senate has approved new tariffs ranging from 5% to 50% on imports from China and other Asian countries that do not have trade agreements with Mexico. These duties target nations including China, India, South Korea, Thailand, and Indonesia.

Key tariff changes include:

– Automobiles (light vehicles): increased to 50%, up from 20%
– Textiles and clothing: set at 35%, a major focus of the legislation
– Steel and aluminium: mainly 35%, with some products subject to 50%
– Footwear, plastics, and glass: 35%
– Electronics and appliances: varying between 5% and 35%

Some specific inputs and parts have been assigned lower tariffs, between 5% and 10%, to protect Mexican assembly plants. However, finished consumer appliances are likely to face the full 35% rate.

This move appears to be an attempt to prompt a trade deal with the US under the previous administration, though the original tariff proposal was much stricter. From a US perspective, the shift in manufacturing from China to Mexico may have been the primary objective, indicating that the strategy was ultimately aimed at impacting China.

What is emerging is a US-led “fortress North America” approach, potentially extending across the Americas. Notably, South Korea—traditionally a strong US ally—has been excluded from exemptions, which could fuel concerns that the US is deprioritising its Asian partnerships in favour of China.

This new tariff scheme risks provoking retaliatory measures from China against Mexico. It also places Canada in a difficult position unless it secures tariff-free status with the US.

Original Source: Adam Button of investinglive.com