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India-Mexico Trade Talks: How a New Deal Aims to Stop $2B Tariff Threat

India is in urgent talks with Mexico to forge a preferential trade agreement. This move is a direct response to Mexico's planned tariff hikes on imports from countries without a free-trade deal. The new duties, set to start in 2026, could hit about $2 billion worth of Indian exports, especially in the automotive and textile sectors. Both governments have agreed to fast-track technical discussions to find a solution that protects bilateral trade interests.

Key Points: India Mexico Preferential Trade Agreement Talks on 2026 Tariffs

  • Mexico plans 5-50% tariffs from 2026 on 1,455 products from non-FTA partners like India
  • The new duties threaten roughly $2 billion of India's annual exports to Mexico
  • Key affected sectors include automobiles, auto parts, textiles, and iron and steel
  • Talks aim to secure a preferential pact to ensure stable market access for exporters
3 min read

India in talks with Mexico for a preferential trade agreement

India and Mexico begin talks for a preferential trade deal to protect $2 billion in exports from new tariffs set for 2026 on autos, steel, and textiles.

"Through continuous engagement... agreeing to pursue a trade agreement to mitigate the impact promptly - Commerce Secretary Rajesh Agrawal"

New Delhi, December 15

India and Mexico initiated discussions to promptly mitigate the impact of tariffs imposed on Indian goods by Mexico and to chart ways and means to protect trade interests.

Mexico has approved tariff hikes of up to 50 per cent from 2026 on imports of select products from Asian countries, including India and China, to protect the national industry and producers.

Citing support for local production and the correction of trade imbalances, Mexico has approved an increase in MFN import tariffs (5-50 per cent) starting in 2026 on 1,455 tariff lines under the WTO framework, targeting non-FTA partners.

According to India, preliminary estimates suggest that this affects around USD 2 billion exports to Mexico -- particularly automobiles, two-wheelers, auto parts, textiles, iron and steel, plastics, leather and footwear, etc.

First proposed in September 2025, the proposal was deferred to August 2026 after concerns from non-FTA partners and industry. The proposal was resubmitted on December 3, 2025, and got clearance from both houses of Parliament. The proposal now awaits Presidential Gazette notification this week.

India-Mexico merchandise trade totalled USD 8.74 billion in 2024 (DGCI&S), with exports of USD 5.73 billion, imports of USD 3.01 billion, and a trade surplus of USD 2.72 billion.

Key exports include light vehicles (USD 0.88 billion), motorcycles (USD 0.39 billion), base metals (USD 0.76 billion), auto parts (USD 0.74 billion), mechanical machinery (USD 0.46 billion), textiles/clothing (USD 0.41 billion), chemicals (USD 0.43 billion), pharmaceuticals (USD 0.38 billion); key imports are crude petroleum oils (USD 1.7 billion), smartphones (USD 0.27 billion), and gold (USD 0.17 billion).

The Indian government has been continuously and comprehensively assessing Mexico's tariff revisions since the issue emerged, engaging stakeholders, safeguarding the interests of Indian exporters, and pursuing constructive dialogue with Mexico to ensure a stable trade environment benefiting businesses and consumers in both countries, the government said on Monday, while releasing the trade data for November.

The Embassy of India had raised immediate concerns with Mexico's Ministry of Economy in late September, which clarified that the measure is not directed against India and reaffirmed its commitment to the bilateral relationship.

"Through continuous engagement thereafter, a virtual meeting between Commerce Secretary Shri Rajesh Agrawal and Vice Minister Dr. Luis Rosendo was held on 2 December 2025, agreeing to pursue a trade agreement to mitigate the impact promptly, with technical discussions initiated from 12 December 2025," India's Commerce Secretary Rajesh Agrawal said in a presentation.

According to a report by the Global Trade Research Initiative (GTRI), Mexico's decision to sharply raise import duties on goods from countries without a free-trade agreement will significantly disrupt India's exports beginning January 1, 2026. GTRI states that Mexico's action is aligned with U.S. trade priorities. The report notes, "Mexico's move is seen as aligning its trade policy more closely with recent U.S. protectionist measures... signalling support for near-shoring and tighter North American supply chains"

- ANI

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Reader Comments

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Priyanka N
$2 billion in exports at risk is no small amount. Our negotiators need to be strong. Mexico says it's not directed against India, but the timing and the GTRI report about US alignment is concerning. Hope the talks lead to a fair deal.
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Aman W
Good that discussions started quickly. But why wait until 2026? The impact will be immediate in January. We need faster resolution. Our MSMEs in auto parts and textiles can't afford this uncertainty. Government should also look at alternative markets in Latin America.
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Sarah B
Interesting to see the trade dynamics. India has a healthy surplus with Mexico. While protecting local industry is Mexico's right, 50% tariffs are very high. A preferential agreement that benefits both sides is the only sensible way forward.
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Karthik V
The focus should be on value addition. We export vehicles and motorcycles, but also import a huge amount of crude oil from them. Maybe the deal can balance energy security with manufacturing exports. Jai Hind!
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Nikhil C
With all due respect to our officials, this feels reactive. The proposal was first made in Sept 2025. We need more proactive trade diplomacy to anticipate such moves, especially from countries closely tied to US policy. Hope we learn from this.

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