Highlights:
Indian exporters are preparing for serious disruptions after Mexico announced sweeping tariff hikes of up to 50 per cent on a wide array of goods, targeting countries with which it has no trade agreement, India among them. The move threatens one of India’s fastest-growing export destinations, particularly for automobiles, a sector heavily dependent on the Mexican market.
Mexico has emerged as India’s largest overseas market for passenger vehicles. In 2024 alone, India shipped roughly $1.9 billion worth of cars to the Latin American nation. For several popular models, more than one-fifth of total exports are sent to Mexico, making the passenger vehicle segment especially vulnerable to sudden policy changes. The new tariff structure, approved by Mexico’s Senate on Wednesday (10), covers autos, auto parts, textiles, clothing, plastics, and steel.
A detailed analysis of trade data presents a mixed picture. While Mexico’s tariff decision could hit India’s automotive exports hard, many other sectors may withstand the shock. Out of India’s $5.6 billion in total exports to Mexico last year, about $589 million worth, roughly 10 per cent, falls in categories where India already holds more than half of Mexico’s import share. These entrenched market positions give India leverage that competitors may struggle to match quickly.
Aluminum is the clearest example of this dependence. India exported $189 million worth of unwrought aluminum to Mexico in 2024, capturing 53 percent of its import volume. Replacing India in this segment would be difficult for Mexico, even with higher duties in place.
Ceramic tiles are another area of strong Indian dominance, accounting for more than half of Mexico’s imports. In tractors, India’s presence is even stronger: Indian exporters hold an impressive 64 percent share of certain tractor imports, leaving Mexican buyers with few immediate alternatives.
However, the resilience in these categories cannot fully offset the risks posed to automobiles, by far the largest component of India’s shipments to Mexico. Passenger vehicles make up nearly one-third of all Indian exports to the country. Any slowdown triggered by tariff hikes could significantly dent export performance in the coming months. Auto parts also face notable exposure, particularly safety airbags, where Mexico accounts for nearly a third of India’s exports.
Other vulnerable categories include flat-rolled stainless steel (20 per cent of India’s exports headed to Mexico) and several high-value vehicle components. The concentration of Indian shipments in these areas heightens the stakes as exporters await clarity on implementation timelines, potential exemptions, and whether certain products might qualify for reduced duties.
The full impact will depend on how quickly Mexican importers adjust, whether Indian firms can absorb part of the tariff burden, and how effectively supply chains can be reconfigured. While strongholds in aluminum, ceramics, and tractors may cushion the blow, the tariff shock represents one of the most serious challenges India’s auto exporters have faced in years.
