Cars, bikes, machinery, medicines… which sector will be hit hardest by Mexico’s 50% tariff?

Following the US, Mexico has also imposed a 50 percent tariff on India. It is believed that the Mexican government made this decision under pressure from US President Donald Trump. Which sector will be most affected by Mexico's tariffs?

Written by: Nivedita Dash Edited by: Nivedita Dash

Updated: December 12, 2025, 1:36 PM IST

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Cars, bikes, machinery, medicines... which sector will be hit hardest by Mexico's 50% tariff?

Mexico, India’s largest trading partner after the United States, has added to India’s difficulties. Mexico has decided to impose tariffs on countries with which it does not have a trade agreement, including India and China. Tariffs ranging from 5% to 50% will be imposed on more than 1,400 products from these countries. These tariffs will be effective from next year and will affect a wide range of goods, from clothing to auto parts. This is not good news for India, as India has a trade surplus with this Latin American country.

In 2024-25, India exported goods worth $5.7 billion to Mexico, while imports were $2.9 billion. Consequently, India’s trade surplus with Mexico was $2.8 billion. India exports vehicles, electrical machinery, machinery, organic chemicals, and aluminum to Mexico. Mexico’s tariffs could be particularly detrimental to India’s auto sector, which exports vehicles and auto parts to Mexico.

India’s exports

Companies like Volkswagen, Hyundai, and Maruti Suzuki export approximately $1.1 billion annually to Mexico. These companies ship approximately 90,000 vehicles to Mexico each year. Similarly, Indian motorcycles are also very popular in Mexico. This could impact the exports of two-wheeler companies like Royal Enfield, TVS, Bajaj, and Honda. Additionally, component exports to Mexico were estimated to be approximately $850 million in 2024-25. Some of these components were used by companies that manufacture vehicles exported to the United States.

Skoda Auto accounts for nearly 50 percent of India’s vehicle shipments to Mexico, followed by Hyundai, Nissan, and Suzuki. Skoda Auto Volkswagen said, “India has been a strong export base for Skoda Auto Volkswagen for many years and continues to help us design and manufacture cars for global markets. Mexico has consistently been one of our key export markets, as demand is growing there and India-made vehicles are receiving a good response. We are monitoring the situation closely. This will not impact our business activities.”

Impact of tariffs

Vinnie Mehta, director general of the Auto Component Manufacturers Association, said exports to Mexico include powertrain and driveline parts, precision forgings, chassis and brake systems, and key electrical and after-market products. Forgings and precision machined components are particularly in high demand. The increased tariffs will generate approximately $2.8 billion in revenue for the Mexican government. However, this move is believed to have been taken under pressure from US President Donald Trump.