Mexico plans to impose tariffs of up to 50% on China and other countries: A multilateral game under trade protectionism

In September 2025, the Mexican government announced its plan to submit a tariff adjustment proposal in the 2026 federal budget, aiming to impose tariffs ranging from 10% to 50% on approximately 1,400 items including automobiles, steel, and textiles from countries such as China, South Korea, and India that have not signed free trade agreements with Mexico. Among them, Chinese automobiles face the highest tariff rate of 50%. This move not only triggered a strong reaction from China but also reflected the complex game of unilateralism versus multilateralism and geopolitics versus economic rationality in the global trade landscape.

I. Tariff Escalation: Economic Logic Under Protectionism

The core objective of Mexico's tariff adjustment this time is to protect its domestic industries. According to documents from the Mexican Ministry of Economy, this policy will affect 8.6% of imports and cover 325,000 manufacturing jobs. Take the automotive industry as an example. Chinese brands have rapidly occupied the Mexican market by leveraging their price advantage (SUV prices are 20% lower than those of Japanese and American models) and offering extremely long warranty periods (up to 10 years for some brands). By 2025, Mexico had surpassed Russia to become the largest export destination for Chinese automobiles. High tariffs can directly undermine the competitiveness of Chinese products, providing local automakers with breathing space.

The steel and textile industries are also facing a shock. Mexico plans to impose a 35% tariff on steel and a tariff on textiles starting from 10% and up to 50%. These industries have long been squeezed by low-priced Asian goods. Between 2019 and 2024, the size of the footwear industry shrank by 13%, partly due to the abuse of the IMMEX duty-free program. The new tariffs aim to restrict the import of finished products and increase tariffs on components, attempting to restructure the industrial chain division of labor.

II. The US Factor: The Hidden Framework of the Tariff Alliance

Mexico's decision cannot be separated from the influence of the United States. Since the beginning of 2025, the Trump administration has continuously pressured Mexico to follow the US example in raising tariffs on China, even threatening to impose a 25% comprehensive tariff due to fentanyl smuggling and immigration issues. Mexican Finance Minister Amador admitted that this move is closely related to the 2026 review of the USMCA (United States-Mexico-Canada Agreement) - by demonstrating trade policy "consistency" to the United States, Mexico can secure market access guarantees in North America.

This "appeasement towards the US" strategy poses dual risks: on the one hand, Mexico's economy is highly dependent on exports to the US (accounting for over 30% of its GDP), and it needs to avoid an escalation of the trade war; on the other hand, excessive accommodation of the US might harm Sino-Mexican economic and trade relations. In 2024, the trade volume between China and Mexico reached 109.4 billion US dollars, with China being Mexico's third-largest export destination. Trade in intermediate goods such as machinery and electronic components is crucial to Mexico's manufacturing industry.

III. China's Response: A Firm Stance in Defense of Multilateralism

The Ministry of Foreign Affairs and the Ministry of Commerce of China made consecutive statements within 24 hours, emphasizing opposition to unilateralism and protectionism. A spokesperson from the Ministry of Commerce pointed out that Mexico's move "aligns with the US's intention to contain China" and may undermine the stability of the global industrial chain. China's position is based on three considerations:1. Rule-based: Although Mexico has not violated the WTO's Most-Favored-Nation treatment principle (imposing the same tariffs on all countries without an agreement), raising tariffs to the maximum (50%) still constitutes a trade restriction measure, which goes against the spirit of inclusive globalization.2. Economic: Chinese automobiles have a market share of 15% in Mexico. An increase in tariffs will directly impact the exports of companies like BYD and Chery, and may trigger a chain reaction - if the Mexican model is replicated, other Latin American countries might follow suit.3. Strategic: Both China and Mexico are members of the "Global South". In 2024, the Belt and Road cooperation projects between the two countries covered energy and infrastructure, among other fields. Trade frictions may affect broader cooperation.

IV. Future Trends: The Art of Balance in the Game

The Mexican Congress is expected to smoothly pass the tariff bill, but its actual impact depends on three variables:1. China's countermeasures: If China imposes tariffs on Mexican specialty exports such as tequila and silver jewelry, it may force Mexico to reconsider.2. The US stance: If the Trump administration offers sufficient concessions to Mexico during the 2026 USMCA review, the tariff pressure may ease.3. Corporate adaptability: Chinese automakers can avoid tariffs through local production in Mexico, but they need to assess the long-term potential and political risks of the Mexican market.

In this wave of trade protectionism, Mexico's choices highlight the predicament of small and medium-sized economies in the game among major powers: they must safeguard their own industrial security while avoiding becoming victims of geopolitics. China, on the other hand, needs to deepen multilateral cooperation and expand its market in the "Global South" to build a more resilient trade network. Tariff barriers may temporarily impede the flow of goods, but they cannot reverse the trend of economic globalization.