Mexico’s tariff hike threatens 14.7% of Brazil’s exports; Brazil is the 5th most affected country

The Mexican government’s proposal to raise import tariffs on 983 goods across 19 sectors places Brazil among the most affected countries, according to a study by the National Confederation of Industry (CNI) submitted to the Brazilian government. Currently under review in the Mexican Congress, the measure is expected to hit 232 Brazilian products, totaling US$1.7 billion in exports in 2024 — equivalent to 14.7% of the US$11.7 billion sold to Mexico during the period.

According to the assessment, the impact is significant because 67.6% of the affected value corresponds to intermediate goods used by Mexico’s own industrial base. Higher tariffs on these inputs tend to increase manufacturing costs in the country and reduce the competitiveness of Brazilian exports in sectors such as motor vehicles, chemicals, metallurgy, rubber, and plastics.

Brazil is expected to be the fifth-most-affected country by the tariff package. The list is led by China (US$34.2 billion), followed by South Korea (US$5.8 billion), India (US$3.1 billion), and Thailand (US$1.8 billion). After Brazil comes Indonesia and Taiwan — all affected because they lack tariff preferences that would shield them from the measure.

Among the exempt countries—those already holding free trade agreements with Mexico—are the United States, the European Union, Japan, Canada, and Vietnam.

The initiative is part of President Claudia Sheinbaum’s new industrial policy, the Programa de Protección para las Industrias Estratégicas. Still under legislative review, the measure could affect US$52 billion in Mexican imports.

The plan proposes raising the average tariff from 16.1% to 33.8%, with some tariff codes reaching 50%. According to Mexico’s Ministry of Economy, the proposal complies with the World Trade Organization (WTO) limits and does not alter conditions of existing trade agreements. In practice, however, higher import costs will directly affect Brazilian industrial sectors that supply the Mexican market.

See below a history of Brazilian container exports to Argentina starting in January 2022. The chart was prepared with DataLiner data:

Brazilian Container Exports to Mexico | Jan 2022 to Oct 2025 | TEU

Source: DataLiner (Click here to request a demo)

The document — submitted by CNI to the Brazilian government — argues that the fragility of Brazil–Mexico trade agreements increases risks for industry. ACE 55, which regulates the automotive sector, is the most relevant instrument: it grants free trade only for that segment and offers 100% tariff preference on 59.8% of the value that would be affected, around US$1.0 billion. Its coverage, however, is limited to vehicles and a few associated items, such as rubber parts, plastics, and machinery and equipment.

The announcement comes as Brazil and Mexico negotiate the modernization of their trade instruments. In August, Sheinbaum and Brazil’s Vice President Geraldo Alckmin — who is also Minister of Development, Industry, Trade and Services (MDIC) — signed a work plan to update existing agreements and finalize a new pact in 2026.

MDIC said in a statement that it is closely monitoring the discussions within the Mexican government about possible tariff changes. The ministry noted that although the measure is not explicitly targeted at Brazil, the potential impact on Brazilian exports is concerning.

That concern was recently conveyed to representatives of the Mexican government. The ministry emphasized the importance of strengthening ties between the countries and ensuring that any measures do not harm the bilateral trade relationship, which both sides hope to expand. “In this regard, MDIC remains engaged in constructive dialogue with the Mexican government.”

“MDIC is evaluating the matter within the context of the dialogue between the two countries, which intensified after Vice President and Minister Geraldo Alckmin’s visit to Mexico in August. At that time, Brazil and Mexico decided to begin, still in 2025, the process of reviewing and updating the Economic Complementation Agreements No. 53 and No. 55 — work that is already underway and scheduled for completion in 2026, with a focus on regulatory modernization, predictability, and expanded opportunities for trade and investment,” the statement said.

According to CNI, the Mexican proposal undermines this cooperative environment and underscores the urgency of accelerating negotiations.

The organization also argues that a more comprehensive agreement could add US$13.8 billion to the combined GDP, increase bilateral trade by US$3.2 billion, and attract roughly US$8 billion in investments.

CNI’s Manager of Trade and International Integration, Constanza Negri, said that the tariff increase proposed by Mexico affects a segment that, although small, has a significant impact on the Brazilian industry. She said the measure could stall advances in the bilateral relationship at a moment when Brazil is seeking to diversify markets and partners.

“It is a matter highly relevant to industry. It may seem like a small segment, but it has significant multiplier effects because we are talking about industrial sectors,” she said.

Negri highlighted that Mexico has always been a priority for Brazilian industry and that, recently, there were signs of progress in modernizing trade agreements. She said discussions are underway on how to deepen the agreement and the existing regulatory framework with Mexico.

“Our concern is that this does not turn into a setback, running counter to progress already being made,” she said.

Regarding the measure’s progress in the Mexican Congress, she said the Brazilian private sector is closely following the process.

“We are monitoring it closely. The proposal has been presented and is under discussion. Our perspective is strategic, timely, and anticipatory, to avoid market-access difficulties,” she said, adding that the technical study prepared by CNI was sent to the Brazilian government to raise Mexican authorities’ awareness of the potential impacts on Brazil.

“Our proposal to the government is that Brazil should not be harmed in the midst of discussions to modernize the agreements. It does not make sense to apply tariff increases while negotiating the expansion of a trade agreement,” she said.

CNI is advocating two parallel strategies: accelerating the review of agreements and conducting sector-specific negotiations to avoid immediate losses. The organization seeks to ensure that Brazil is treated as a country with an agreement in force or under modernization, which, in the industry’s view, is supported by Mexico’s own regulatory framework.

Negri said that despite the concern, she sees room for negotiation.

“We are confident. This is a measure linked to Mexico’s domestic industrial policy, but we believe Brazil has strong arguments to be included among the countries shielded from the impacts,” she said.

Source: O Globo

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