Mexico’s parliament passed a bill to impose up to 50% tariffs on free trade agreements (FTAs) such as South Korea and China.
According to Reuters on the 10th, the “Amendment to the General Export-Import Tax Act,” which includes a plan to raise tariffs, was passed by the Mexican House of Representatives with 281 votes in favor, 24 against, and 149 abstentions. The bill was also approved in the Senate vote with 76 votes in favor, five against, and 35 abstentions. The bill will finally take effect after signing Mexican President Claudia Sheinbaum.
If the bill is finally passed, countries that have not signed an FTA with Mexico will be subject to significant tariffs. The main targets are South Korea, China, India, Thailand, and Indonesia.
The amendment included imposing tariffs of about 35% on 1,463 items, including automobiles, auto parts, steel, plastics, textiles, and home appliances.
Initially, the Mexican administration pushed for a plan to impose a 50% tariff on most goods. However, the applicable tax rate was lowered to 20-35% due to opposition from the domestic industry. The 50% tariff applies to finished vehicles made in China.
In response to the measure, which will take effect in 2026, Mexico said it was intended to protect its industry. However, analysts say that the move is conscious of the U.S. ahead of negotiations to revise the U.S.-Canada-Mexico Agreement (USMCA) scheduled for next year.
Mexico’s move is expected to have a significant impact on Korea as well. Korea has recorded a continuous trade surplus with Mexico since 1993. By the third quarter of this year, the cumulative surplus amounted to $12098 billion. Major export items are automobile parts, steel, and electronic parts.
JULIE KIM
US ASIA JOURNAL
