Mexican President Claudia Sheinbaum speaks throughout a press convention on the Nationwide Palace in Mexico Metropolis, Mexico, Wednesday (native time). EPA-Yonhap
Issues are mounting over the operations of Korean firms in Mexico after the Latin American nation on Wednesday (native time) accredited tariff hikes of as much as 50 p.c on 1,463 merchandise from Asian nations that lack a free commerce settlement (FTA).
The affected merchandise embrace equipment, auto elements and digital elements, which account for about 30 p.c of Korea’s exports to Mexico — its largest buying and selling companion in Latin America. Since 1993, Korea has recorded an annual commerce surplus with Mexico. Throughout the first three quarters of this yr alone, Korea’s commerce surplus with Mexico exceeded $12 billion.
Given Mexico’s significance for Korea’s commerce, the Korean authorities had requested Mexico to exempt Korean merchandise from the tariff hikes after the administration of President Claudia Sheinbaum proposed the measure in September.
On the time, the Ministry of Commerce, Business and Assets stated it could proceed monitoring the problem and work with business officers to attenuate the detrimental impression on Korean companies. Nonetheless, the ministry finally didn’t safe exemptions for Korean corporations.
To learn from U.S. tariff exemptions below the U.S.-Mexico-Canada Settlement, Korean automakers and electronics producers have arrange manufacturing services in Mexico, which provides comparatively low labor prices. They’ve relied on uncooked supplies and elements sourced from Korea for his or her ultimate merchandise.
Regardless of these enterprise ties, negotiations on a Korea-Mexico FTA have remained stalled since talks started in 2006. Whereas the 2 nations signed an Funding Assure Settlement in 2000, the framework doesn’t present tariff exemptions.
In consequence, Japan, one in all Mexico’s FTA companions, stands to realize a worth benefit over Korea as soon as the tariff hikes take impact.
To handle rising issues, the commerce ministry stated it can quickly convene a gathering with enterprise leaders to research the impression of Mexico’s tariff hikes and focus on doable countermeasures.
“Most of Korea’s exports to Mexico encompass elements and uncooked supplies processed by Korean firms to provide items which can be then exported to the U.S.,” a commerce ministry official stated.
“Given Mexico’s exemption of tariffs on imports of uncooked supplies for export manufacturing, the proposed tariff hikes are anticipated to have restricted impression on Korean corporations working in Mexico.”
China, in the meantime, warned that Mexico’s new tariffs would harm commerce relations.
The Asian nation is predicted to be most affected, as Mexico imported $130 billion price of merchandise from China in 2024 — second solely to imports from the U.S.
“China has all the time opposed all types of unilateral tariff will increase and hopes Mexico will appropriate such unilateralist and protectionist practices as quickly as doable,” China’s commerce ministry stated in an announcement.
