Relevance: GS Paper 2 (International Relations), GS Paper 3 (External Trade) | Source: Indian Express, Government Trade Data
News
Mexico has imposed five to fifty percent tariffs on imports from countries without a free trade agreement, including India. The duties will remain in force for two years, until 2026.
Impact on Indian Exports
Although India sends only about 1.3 percent of its total exports to Mexico, some sectors face concentrated risk:
- Motor vehicles and auto components form nearly one quarter of India’s exports to Mexico.
- Motorcycle exports also form a significant share.
Countries with free trade agreements with Mexico retain preferential access, reducing the competitiveness of Indian firms.
Way Ahead for India
India may need to pursue targeted tariff negotiations or explore trade agreement options to protect its market share in Latin America.
| Prelims Value Box Most Favoured Nation (MFN) Principle: Under the World Trade Organization rules, a member country must apply the same tariff rate to all trading partners unless a free trade agreement or special preference scheme exists. World Trade Organization: The global body governing rules on tariffs, trade remedies, and non-discrimination. Highlight for Prelims
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Q. Consider the following statements regarding Mexico’s recent tariff measures:
- Under World Trade Organization rules, Mexico must apply the new tariffs uniformly to all countries that do not have a free trade agreement with it.
- India’s automobile sector is among the most affected due to the tariff increase.
- Tariffs adopted under the United States–Mexico–Canada Agreement automatically apply to all World Trade Organization members.
How many of the above statements are correct?
A. One only
B. Two only
C. All three
D. None
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