Mexico formalizes and expands import tariffs to more than 1,400 products—key impacts for the automotive sector and beyond - White & Case LLP

Mexico has recently formalized and significantly expanded its import tariffs, impacting over 1,400 products across various sectors. This move, published in the Official Gazette of the Federation (DOF) on April 22, 2024, aims to provide certainty to market participants, foster national industry development, support the domestic market, and counteract unfair trade practices. Importers, customs brokers, and trade compliance officers must understand the scope and implications of these new measures.

Who is Affected and What are the Rates?

The expanded tariffs primarily target a broad range of products, with a significant focus on the automotive sector's supply chain. Key industries and product categories now subject to these duties include:

• Steel and Aluminum: Many products in these categories face a 25% tariff, with some specific steel products (e.g., under Harmonized Tariff Schedule (HTS) Chapters 72 and 73) seeing duties as high as 50%.
• Textiles and Footwear: These sectors are heavily impacted, with general tariffs of 25%. Some textile products (e.g., under HTS Chapters 61, 62, and 63) may face 35% duties, and certain footwear (e.g., under HTS Chapter 64) could be subject to 30%.
• Chemicals and Plastics: Products in these categories are generally subject to a 25% tariff.
• Other Key Sectors: This includes tires, paper and cardboard, ceramic products, glass, electrical equipment, transport materials, musical instruments, and furniture, all typically facing a 25% tariff.

These tariffs became effective on April 23, 2024, and are set to remain in place for two years. It's crucial to note that the tariffs range from 5% to 50%, with the majority of affected products facing a 25% duty.

Important Exemptions and Considerations

A critical aspect for importers is that these new tariffs generally do not apply to products originating from countries with which Mexico has existing free trade agreements (FTAs). This includes major partners such as the United States and Canada under the United States-Mexico-Canada Agreement (USMCA), as well as countries covered by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Mexico Free Trade Agreement (FTA). Importers must ensure they can properly substantiate the country of origin to claim these exemptions.

What Importers Should Do Now

Given the broad scope and immediate effect of these tariffs, importers into Mexico should take prompt action:

• Review HTS Codes: Immediately identify and review the Harmonized Tariff Schedule (HTS) codes for all products imported into Mexico to determine if they are now subject to the new duties.
• Assess Impact: Evaluate the financial impact of these tariffs on supply chain costs, pricing strategies, and overall business operations.
• Verify Country of Origin: For products that might be exempt, ensure robust processes are in place to accurately determine and document the country of origin to leverage existing free trade agreements.
• Explore Duty Mitigation Strategies: Investigate options such as the IMMEX program for temporary imports, duty drawback mechanisms, or potential reclassification of products where appropriate.
• Seek Expert Guidance: Consult with trade compliance professionals or legal counsel to navigate the complexities of these new regulations and develop tailored compliance strategies.