Mexico has decided to impose tariffs of up to 50% on countries with which it has not signed a free trade agreement (FTA). Korea is also subject to the tariffs, and Mexico said it is in talks with major countries, including Korea.
Claudia Sheinbaum, the president of Mexico, said at a regular news conference on the 11th (local time), "Mexico's tariffs are for economic revitalization," and added, "We are discussing with the embassies (in Mexico) of the countries affected by the proposed measures."
President Sheinbaum said, "We are explaining to ambassadors from Korea and China that this measure is related to strengthening Mexico's economy," adding, "We do not want conflict with the countries concerned." In this regard, the South Korean Embassy in Mexico said, "There were consultations with the Mexican authorities."
Earlier, the Mexican government decided to select 1,463 items in 17 strategic sectors that can lead national economic development and impose differential maximum tariffs within the scope that does not violate World Trade Organization (WTO) rules.
Items subject to the tariffs include automobiles and auto parts, steel and aluminum, plastics, home appliances, and textiles. Mexico currently imposes tariffs ranging from 0% to 35% on 1,463 items. The tariff rate will be raised to as high as 50%.
These details were disclosed in the process of submitting next year's Mexican government budget proposal to Congress. Related content is also included in the transcript of a speech by the Minister of Economy of Mexico.
Mexican authorities estimated that this measure would affect about 8.6% of all imports. In monetary terms, it is $52 billion (about 72 trillion won).
Some observers noted that because China and Mexico have not signed an FTA, the imposition of tariffs was intended to appease the United States, the largest trading partner. But President Sheinbaum of Mexico said, "That is not the purpose," explaining that it is "to strengthen domestic production capacity."
For Korea, Mexico is the largest trading partner in Latin America. Auto parts and steel sheets, the No. 1 and No. 2 export items to Mexico, are subject to tariffs, and damage is expected.
Kia operates a plant in Mexico that can produce 400,000 vehicles a year. Many parts are manufactured in Korea, exported to Mexico, and assembled there. Samsung Electronics and LG Electronics produce TVs, refrigerators, and washing machines in Mexico and export them to the United States.
However, if Mexico applies a tariff reduction program to Korean exports as it has so far, the damage to our corporations could be reduced. Mexico operates the "Sectoral Promotion Program (PROSEC)." It is a type of special tariff policy that grants benefits to enhance the competitiveness of specific industries such as electronics, steel, and auto parts when raw materials are imported from non-FTA countries, processed, and exported to places like the United States and Canada. There are also expectations that the Maquiladora Export Manufacturing Industry Promotion Program (IMMEX) could mitigate the tariff impact.