India and Mexico are discussing ways to mitigate the impact of Mexico’s proposed tariff increases on countries it does not have a free trade agreement with, which includes India, Commerce Secretary Rajesh Agrawal said on Monday (December 15, 2025). A quick way to resolve the issue would be through a Preferential Trade Agreement, he said, adding that the proposed tariffs would impact about $2 billion worth of exports from India to Mexico.
The Mexican government had on December 3 re-submitted to its Parliament a previous proposal to hike tariffs to 50% on imports from countries which it had accorded Most Favoured Nation (MFN) status and had not signed a trade agreement with. The proposal was cleared by both houses of the Mexican Parliament on December 9-10, and now awaits the Presidential gazette notification this week.
Also Read | India engaged with Mexico over ‘unilateral’ tariff hike
“Tariffs have been increased on a most-favoured nation basis, within the World Trade Organization framework,” Mr. Agrawal said at a press briefing on Monday. “When MFN tariffs are increased, it impacts non-Free Trade Agreement and non-Bilateral Trade Agreement partners. That is how it will impact India as well.”
He added that, due to the tariffs being on an MFN basis and within the legal framework of the World Trade Organization (WTO), India would not have recourse at the WTO to challenge the decision. However, it is engaging bilaterally with Mexico to find a way forward.
“According to the initial proposal that was supposed to come into effect from August 2026, the impact on Indian exports would have been $3.8 billion,” Mr. Agrawal said. “Subsequently, we have been engaged with them and we flagged that, though this was within their legal rights to raise these tariffs, it would not be good for trade. The final plan they have come out with will have an impact of $2 billion on India exports.”
Also Read | Trade deficit falls 61% in Nov. 2025 to $6.6 billion on surging merchandise exports
The tariffs are expected to impact India’s automobile, two-wheelers, auto parts, textiles, iron and steel, plastics, and leather and footwear exports to Mexico.
“The Embassy of India raised immediate concerns with Mexico’s Ministry of Economy on September 30, which clarified that the measure is not directed against India and reaffirmed its commitment to the bilateral relationship,” Mr. Agrawal said.
He added that, from what “he has heard”, Mexico’s move is primarily aimed at reducing imports from China.
Also Read | Mexico’s 50% tariffs have been in place since 2024, but can still hurt India’s auto exports
“We discussed at the Secretary level and now there are technical discussions at the joint secretary level,” Mr. Agrawal said. “The only fast way forward is to get into a Preferential Trade Agreement, because a Free Trade Agreement would take a lot of time. We are trying to see what would be a good way forward.”
A Preferential Trade Agreement is a bilateral agreement between two countries to reduce tariffs or provide tariff exemptions on specific products. A Free Trade Agreement is more expansive, dealing with most items, and including only a small negative list on which the exemptions do not apply.
Published – December 15, 2025 06:13 pm IST
