(C) Deccan Chronicle

MEXICO CITY — Starting January 1, 2026, Mexico will implement a sweeping tariff hike on 1,463 strategic items from countries with which it does not have a Free Trade Agreement (FTA), including South Korea, China, and India. The move, seen as a response to U.S. pressure to curb transshipments, significantly impacts sectors such as automobiles, steel, and machinery.

Strategic Protectionism: "Plan Mexico"
The Mexican Office of the Presidency announced an amendment to the General Import and Export Tax Law (LIGIE), raising tariffs mostly between 5% to 35%, with certain steel products facing a staggering 50% levy.

The government justifies the hike as part of its "Plan Mexico" initiative, aimed at:

Protecting approximately 350,000 local jobs.
Increasing the domestic component ratio to 15%.
Encouraging foreign firms to shift from simple exporting to local manufacturing.

Navigating the US-China Tug-of-War
Analysts suggest the timing is no coincidence. As the U.S. threatens to renegotiate or exit the USMCA, Mexico is under intense pressure to limit Chinese-origin goods entering the North American market. By imposing these tariffs, Mexico signals its alignment with U.S. trade interests while attempting to reduce its own $113.1 billion trade deficit with China.

Impact on South Korean Industry
While South Korea lacks a bilateral FTA with Mexico, many Korean firms operate via PROSEC or IMMEX (maquiladora) programs. Though these specific incentives are expected to remain intact, the broader industry faces heightened uncertainty and increased costs in supply chain logistics.

The South Korean government has officially requested that Mexico minimize the impact on its exporters. Meanwhile, other affected nations are reacting differently: China has demanded a reversal of the "protectionist" measures, while India has proposed a new preferential trade agreement.