Mexico will impose 50% tax on vehicles coming from Asian countries
Mexico Tariff: Mexico has announced to increase the tax (tariff) on vehicles coming from China and other Asian countries to 50 percent. The government says that its purpose is to save jobs, while analysts believe that this decision is also to please America.
Mexico has announced that it will increase the tax (tariff) on vehicles coming from China and other Asian countries to 50%. This step is part of a major import reform. The government says that its purpose is to save jobs, while analysts believe that this decision is also to please America.
Mexico's Economy Ministry said that new tariffs will be imposed on many sectors, including steel, textiles, and automobiles, which will affect imports worth about $ 52 billion.
At present, a 20% tax is levied on vehicles coming from China, which will now be increased to 50%. "Without a level of protection, you almost cannot compete," said Economy Minister Marcelo Ebrard.
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He said the move was within the limits set by the World Trade Organization (WTO) and was aimed at saving jobs in Mexico because Chinese vehicles were being sold at very low prices.
China has strongly opposed the move. Its foreign ministry said it was against "any kind of pressure and false pretenses". China expressed hope that Mexico would work with it to promote economic reform and trade.
The new plan will particularly affect countries with which Mexico has no trade agreements. These include China, India, South Korea, Indonesia, Russia, Thailand, and Turkey.
According to a government document, the move will affect 8.6% of Mexico's total imports and protect about 3.25 lakh industrial and manufacturing jobs.
Apart from this, a 35% tax will be imposed on steel, toys and motorcycles. A tariff of 10% to 50% will be imposed on textiles.
This decision has come at a time when the US is pressuring Latin American countries to limit economic relations with China.
Experts say that the US does not want China to reach its market through Mexico (backdoor). In the last 10 years, Mexico's trade deficit with China has doubled to $120 billion.
Some analysts believe that this step will serve two purposes. First, the government will get more revenue and second, the US (especially Trump) can be appeased.
Mexico and the US already have a free trade agreement (NAFTA/USMCA), which also includes Canada. Both countries are each other's biggest trade partners. This is the reason why the effect of US pressure is clearly visible on Mexico's policies.
This agreement is going to come up for review next year. In such a situation, this move of Mexico is being seen as an attempt to balance America while protecting its industry.
