India Warns Mexico of Retaliation as 50% Tariff Hike Threatens Indian Exports

India reacted strongly to Mexico’s unilateral decision to raise import tariffs on goods from countries without free-trade agreements from January 1, 2026. The Government of India criticized the move, which will raise the tariffs to as high as 50% on some of the products, warning that it will take “appropriate measures” to protect its interests. 

According to reports, the move has been described as inconsistent with “the spirit of cooperative economic engagement” between the two nations and contrary to principles of transparency in the multilateral trading system. Most of the affected products might face an increased duty of up to 35%, while the rates range from 5% to 50%. 

On the diplomatic front, Commerce Secretary Rajesh Agrawal has held high-level discussions with Mexico’s Vice Minister of Economy, Luis Rosendo, and more meetings are expected to follow. The Indian Embassy in Mexico had expressed concerns to their Mexican counterparts on September 30, 2025, to seek concessions for Indian exports. 

Observers also report that the United States, being Mexico’s largest trading partner, could have an influence on this decision, as the US is looking to counter China’s growing influence on Latin America, and this move could be to appease the US. Mexico faces 25% U.S. tariffs and might have tried to reduce the tensions. 

Why Mexico raised tariffs, and what does it mean for India 

The Mexican government says that they aim to protect its domestic trade, jobs, and manufacturing from what they describe as “excessive import competition” in sectors such as autos, textiles, steel, plastics, footwear, and other consumer and intermediate goods. Officials have said that this will help the local producers against cheaper Asian imports. 

Analysts estimate that the tariff hikes could generate around $3.7 billion in additional revenue for Mexico in 2026. However, critics have warned that the policy is a double-edged sword and “risks disrupting global supply chains” and could trigger retaliation. 

India has a trade surplus with Mexico, which mainly supplies vehicles, machinery, electrical equipment, chemicals, and metals, which is estimated to be about $5.3 billion; in the last fiscal year, the automobiles alone made close to $1 billion. It is not yet clear about the exact impact that the Indian gods will face, but Indian vehicle exports will be immediately hit. Reuters reported that the Society of Indian Automobile Manufacturers had urged India’s commerce ministry in November to “maintain status quo.” According to a copy of the letter, they said, “The proposed tariff hike is expected to have a direct impact on Indian automobile exports to Mexico…we seek Government of India’s support to kindly engage with the Mexican government.”

India could explore opening exports to other countries or expanding into sectors that are not directly subject to tariffs.

Also Read: India-Mexico Trade Alert: 75% Of Exports Hit by Steep Tariffs, $5.75 Billion At Risk, India’s Export Strategy Under Pressure