Mexico has determined to impose excessive tariffs on imports designated as “strategic objects” concentrating on international locations with out free commerce agreements (FTA), together with Korea and China. South Korea, which considers Mexico its largest buying and selling companion in Central and South America, is anticipated to face inevitable impacts.
In keeping with Reuters and different sources on Dec. 10 (native time), the Mexican Senate handed a authorities modification to the Normal Import and Export Tax Regulation (LIGIE) in a plenary session held that day with 76 votes in favor, 5 towards, and 35 abstentions. Earlier that day, the Home of Representatives additionally handed the modification with 281 votes in favor, outnumbering the opposition (24 votes) and abstentions (149 votes). This invoice, led by the Mexican administration, is anticipated to be applied from January subsequent 12 months after President Claudia Sheinbaum’s signature.
The core of the modification is to lift tariff charges by merchandise from the present 0-35% vary to a most of fifty%. The objects topic to those tariffs encompass 1,463 strategic objects together with auto elements, metal and aluminum, plastics, residence home equipment, and textiles. Native media reported that the Mexican authorities ready the modification to impose tariffs of 20-35% on most objects and tariff charges starting from a minimal of 5% to a most of fifty% on some objects, primarily based on discussions with native industries. Particular tariff objects and charges are anticipated to be confirmed after publication within the official gazette.
China is anticipated to be most affected by this measure. China has develop into a serious buying and selling companion of Mexico, with commerce quantity greater than doubling over the previous 10 years, in a construction the place Mexico primarily exhibits commerce deficits. Mexico’s commerce deficit with China reached roughly $120 billion final 12 months alone.
South Korea, which considers Mexico its largest buying and selling companion in Central and South America, can even face inevitable impacts. Since 1993, when native authorities started publicly releasing associated data on-line, Korea has constantly recorded commerce surpluses with Mexico. This 12 months, it’s estimated to have achieved a surplus value $12.98 billion via the third quarter. Main exports are equipment and auto elements, and digital gadget elements, which accounted for roughly 30% of export share as of final 12 months. A few of these are confirmed to be strategic objects designated by the Mexican authorities. Whereas Korea and Mexico have established a Bilateral Funding Treaty (2000), essentially the most fundamental framework between buying and selling international locations, this doesn’t comprise grounds for defending towards tariffs. Korea and Mexico have continued FTA-related discussions since round 2006, however are presently at an deadlock.
