Background on Key Players and Relevance
India, a significant global exporter, is proposing a preferential trade agreement with Mexico to mitigate the impact of anticipated tariff increases that threaten its exports valued at approximately 2,000 million USD. The Indian Secretary of Commerce, Rajesh Agrawal, announced this initiative following discussions with Mexico’s Undersecretary of Foreign Trade, Luis Rosendo Gutiérrez.
Mexico’s Tariff Increases and Their Potential Impact
On Wednesday, the Mexican Senate approved tariff hikes of up to 50% starting next month on imports from various countries, including India. This move aims to appease the United States before a regional trade agreement review next year, according to analysts and the private sector. The Mexican government argues that this measure will strengthen local industries, protect jobs, and address trade imbalances.
- In 2024, India exported goods worth 5,730 million USD to Mexico and imported goods valued at 3,010 million USD.
- Key exports include vehicles, basic metals, auto parts, and textiles.
- Preliminary estimates suggest that exports worth around 2,000 million USD in sectors like automotive, auto parts, textiles, steel, and iron could be affected.
Agrawal stated, “The primary goal of Mexico is not to adversely impact Indian exports.” He further mentioned that India has committed to Mexico since September this year to “seek a trade agreement promptly to mitigate the impact.”
“As Mexico has raised tariffs on a NMF (Most Favored Nation) basis, we do not see any recourse at the WTO,” Agrawal added.
Reuters reported last week that Mexico’s decision to increase tariffs will affect shipments worth 1,000 million USD from leading Indian automobile exporters such as Volkswagen and Hyundai.
Key Questions and Answers
- What is the purpose of India’s proposed trade agreement with Mexico? The main objective is to soften the blow of anticipated tariff hikes that could negatively impact Indian exports valued at 2,000 million USD.
- Who are the key players involved in these discussions? The Indian Secretary of Commerce, Rajesh Agrawal, and Mexico’s Undersecretary of Foreign Trade, Luis Rosendo Gutiérrez, are leading these negotiations.
- What sectors will likely be affected by Mexico’s tariff increases? Sector estimates suggest automotive, auto parts, textiles, steel, and iron exports could be impacted.
- Why is Mexico increasing tariffs? The Mexican government claims this move aims to bolster local industries, safeguard jobs, and address trade imbalances. It also seeks to appease the United States before a regional trade agreement review.
- Which Indian exporters are affected by Mexico’s tariff hikes? Leading Indian automobile exporters, including Volkswagen and Hyundai, are likely to face shipment disruptions worth 1,000 million USD.
