Government’s Measures to Protect Manufacturing Sector
On Monday, the Mexican federal government announced a new tariff package with the primary goal of safeguarding approximately 350,000 jobs in Mexico, focusing on key manufacturing sectors. This move aims to counterbalance the rapid growth of imports at below-international reference prices.
Key Players: Claudia Sheinbaum and Marcelo Ebrard
During Claudia Sheinbaum’s morning press conference, Economy Secretary Marcelo Ebrard explained that the tariff package was sent to Congress at Sheinbaum’s instruction and approved after extensive dialogue and adjustments with lawmakers, industries, and trade partners. Ebrard emphasized that the central purpose of this tariff package is not geopolitical or targeted at any specific country, but rather to rectify unfair competition practices affecting domestic employment.
Sector-specific Impact
Ebrard highlighted that the sectors most affected by growing imports are textiles, clothing, footwear, steel, and the automotive industry, which accounts for nearly one-third of manufacturing jobs in Mexico.
- Automotive imports have grown by 34%.
- Steel imports have increased by 12.4% over the past two years.
- Clothing imports have risen by 20.8%, and footwear imports by 22.3%.
Tariff Adjustments and Scope
The tariff package comprises 1,466 tariff items spread across 17 strategic sectors, with significant adjustments in automotive parts, steel, textiles, clothing, and aluminum. These changes were made following warnings from businesses that they couldn’t replace certain inputs in the short term without causing negative impacts.
Ebrard clarified that these tariffs only apply to products from countries with which Mexico lacks a trade agreement and that existing quota schemes for domestic production and export will remain in place.
Support from Claudia Sheinbaum
Sheinbaum, as per Ebrard’s explanation, backed the measure by prioritizing preventive action to protect jobs and bolster domestic industry over facing a significant job loss in the near future.
Broader Plan Mexico Strategy
As part of the Plan Mexico, this tariff package is integrated into a more extensive strategy to elevate national content in production chains by 15%, increase investment to 28% of GDP, and generate 1.5 million jobs, with a particular focus on small and medium-sized enterprises.
Key Questions and Answers
- What is the main objective of Mexico’s new tariff package? The primary goal is to protect around 350,000 jobs in key manufacturing sectors affected by the rapid growth of imports at below-international reference prices.
- Which sectors are most impacted by the tariff adjustments? The textile, clothing, footwear, steel, and automotive industries are the most affected.
- Which countries’ imports are subject to these new tariffs? Tariffs apply only to products from countries with which Mexico does not have a trade agreement.
- What is the broader strategy behind this tariff package? It’s part of Plan Mexico, which aims to increase national content in production chains by 15%, boost investment to 28% of GDP, and create 1.5 million jobs, focusing on small and medium-sized enterprises.
