Why Mexico’s 50% tariff on Chinese cars won’t work

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It’s a good first step, but, on its own, the tariff increase from 20% to 50% on Chinese cars entering Mexico doesn't really do anything. There are three main arguments that have been used to justify the policy, at a 50% rate, every one of them is no more than a pipe dream.

Pipe dream 1: Tariffs will help the local auto industry

President Claudia Sheinbaum’s new tariffs on 1,400 products aren’t exclusively aimed at China. They apply to any country with which Mexico does not have a free trade agreement, including South Korea, India or Türkiye. Yet, ultimately, the policy will mostly affect Chinese imports and, of these, the industry they have most disrupted has been the auto sector.

Chinese cars are worth focusing on because of how important they are on both sides of the Pacific. The sudden surge in Chinese auto-imports has made Mexico China’s biggest export market for light vehicles. Meanwhile, their sudden arrival en masse threatens to undermine Mexico’s own car industry, its biggest industrial sector.

These tariffs are meant to make imported autos less competitive, giving space to domestic producers to compete. There is only one problem: A 50% tax on Chinese cars is unlikely to put a dent in imports coming into Mexico.

This is because Chinese productive capacity is so subsidised and so large that it is practically insurmountable with simple tariff barriers. “From 2023 to the first quarter of 2025, the average price of a Chinese-imported car went from $21,000 to $16,000,” Jorge Guajardo, former Mexican ambassador to China and current advisor on Chinese-Latin American trade, told The Mexico Political Economist. “Even if you put a 100% tariff on them they’d still make a profit.”