Mexico's Tariff Barriers Escalate, Resilience and Challenges Coexist in China's Aluminum Semis and Aluminum Products Exports to Mexico [SMM Analysis]

SMM October 31, 2025 News:

As a key participant in the global aluminum industry chain, China's exports of aluminum semis and aluminum products to Mexico have shown a complex pattern of coexisting "resilience and challenges" amid recent trade frictions. In recent years, Sino-Mexican trade relations have become strained due to Mexico's repeated unilateral tariff hikes and restrictive measures, presenting a game pattern of "Mexico actively exerting pressure, China precisely countering." Based on SMM's exclusive monthly export data from 2023 to 2025 and the latest developments in Mexico's tariff policies, we conduct an in-depth analysis from four dimensions: policy impact, data trends, causes and effects, and industry responses.

I. Impact of Tariff Policies: Latest List Released, Mexico Officially Imposes Additional Tariffs on 1,400 Chinese Products, with Rates up to 50%

On October 29, 2025, the Mexican Senate formally approved the 2026 budget revenue proposal put forward by President Claudia Sheinbaum. This proposal is part of Sheinbaum's "Plan México," aimed at boosting domestic production, reducing import dependency, and enhancing economic sovereignty. The proposal was submitted to the House of Representatives in September and passed smoothly due to the majority held by the ruling Morena party and its allies in Congress. Tariff reform is a core component of this proposal, which amends the General Import and Export Tax Law to levy temporary tariffs on imported goods from non-free trade agreement (FTA) countries (such as China). It is expected to generate approximately 70 billion pesos (about $3.76 billion) in revenue annually. China is Mexico's second-largest source of imports, accounting for 19.96% of Mexico's total imports. This move may lead to increased import costs and inflationary pressures.

Coverage: Involves 1,371 tariff codes, accounting for 16.8% of all Mexican tariff codes. It mainly targets over 1,400 products, focusing on key industries to reduce the trade deficit with Asia (especially China).

Products and Industries: The tariffs primarily target industries such as automobiles, textiles, plastics, steel and aluminum (affecting 248 tariff codes for anti-dumping protection purposes), apparel, toys, footwear, furniture, paper, and glass. Among these, aluminum products (including aluminum sheets, aluminum alloys, etc.) are mainly targeted at imports from Asia, with tax rates increased from the original 0–30% to 25–50%.

New Tax Rates: Varying rates of 10%, 20%, 25%, 30%, 35%, and 50%, depending on the product and country. Overall rate structure: 10–15% for raw materials/simple intermediate products; 20–35% for intermediate components/semi-finished products; 35–50% for finished products/high-value goods.

Applicable Countries: Applies to non-FTA countries such as China, Southeast Asian countries, South Korea, India, Russia, and Turkey (Mexico has FTAs with about 50 countries).

Tariff Validity Period: The additional tariffs are valid until December 31, 2026, and may be extended.

II. Panorama of Export Data: High Dependence on Aluminum Semis, Mild Share of Aluminum Products but Policy Risks Accumulate

(1) Exports of Aluminum Semis to Mexico: Resilience Amid Share Fluctuations, Signs of Pressure During Tariff-Sensitive Periods
According to the data on China's aluminum semis exports to Mexico monitored by SMM (Figure 1), the proportion of China's aluminum semis exports to Mexico in total exports showed significant fluctuations from 2023 to 2025:

Peak Periods: During multiple periods such as February–April 2024 and March–May 2025, the proportion climbed to 11%–12%, reflecting the demand resilience of the Mexican market for Chinese aluminum semis during specific cycles.

Periods Under Pressure: In October 2024, the proportion dropped sharply to 7%, and it briefly pulled back to 9% in June 2025. These periods closely align with Mexico’s initiation of anti-dumping investigations on aluminum products and the planning of tariff reforms, indicating that policy signals have already disrupted trade flows.

Export Volume Dimension: China’s monthly exports of aluminum semis to Mexico mostly remained in the range of 35,000–58,000 mt. In November 2024, exports once reached 63,000 mt, indicating that Mexico remains an important export destination for Chinese aluminum semis even amid trade friction.

(2) Exports of Aluminum Products to Mexico: Moderate Proportion but Clear Impact of Industry-Specific Tariffs
In contrast, China’s exports of aluminum products to Mexico (Figure 2) accounted for 1%–2.5% of China’s total aluminum product exports. Although this dependence is lower than that for aluminum semis, the “targeted impact” of policies on this sector cannot be overlooked:

Product Coverage: Mexico's 2025 tariff reform proposal explicitly includes aluminum products (such as aluminum sheet, aluminum alloy) within a 10%-50% tariff increase range. Concurrently, the anti-dumping investigation on aluminum bar and rod and aluminum extrusion launched in March 2025 directly targets China's competitive aluminum product categories.

Data Correlation: The share of aluminum product exports to Mexico temporarily pulled back to 1.5%-2% during January-February 2025, coinciding with the period when Mexico was formulating its tariff reform, indicating that enterprises adjusted their trade strategies in advance.

III. Causes and Impacts: From Industrial Protection to Geopolitical Games, Multiple Factors Drive Escalating Restrictions

A. Systematic Escalation of Mexico's Tariff Policy on Chinese Aluminum Products: Essentially a Superposition of US "Nearshoring" Strategy Pressure, Domestic Industrial Protection Demands, and Goals to Improve the Trade Deficit

1. US Coercion under the USMCA Framework: Blocking the Channel for Chinese Aluminum Semis to "Enter the US via Mexico"

As a member of the US-Mexico-Canada Agreement (USMCA), Mexico was forced to compromise with the US on rules of origin for aluminum products. The rules adjusted in July 2024 require that primary aluminum and the smelting and casting processes must be completed within the US, Mexico, or Canada; otherwise, a 10% tariff is imposed on products containing Chinese aluminum. This rule directly undermines the possibility of Chinese aluminum semis entering the US market through Mexico, forcing Chinese aluminum semis exports to Mexico to focus more on local Mexican demand, artificially compressing market space.

2. Domestic Industrial Protection: Ambition to Build a "50% Local Supply Chain"

Mexico's aluminum-consuming mainstay industries, such as automotive and construction, have long relied on imports from China. The intention behind the tariff hikes clearly aims to "increase the proportion of the local supply chain to over 50%." Taking aluminum extrusion as an example, Mexico's domestic capacity is insufficient, and it has long relied on imports from China to meet demand in the construction and industrial sectors. The combination of tariff hikes and anti-dumping investigations is essentially intended to secure market share and growth time for local aluminum processing enterprises.

3. Trade Deficit Driver: Dual Goals of "Revenue Increase + Decoupling" Under a $71.067 Billion Deficit

The China-Mexico trade deficit reached $71.067 billion in 2024. By imposing tariffs on key commodities like aluminum, Mexico seeks to, on one hand, fill budget shortfalls (e.g., the 2026 budget proposal anticipates an increase in revenue of $3.76 billion), and on the other hand, promote a "de-sinicization" of its trade structure, aligning with its strategic narrative of "economic sovereignty."

B. Impact of Tariff Policies on Exports of Chinese Aluminum Semis and Aluminum Products

1. Increase in Export Costs: The tariff hikes imposed by Mexico directly lead to increased import costs for Chinese aluminum semis and aluminum products in the Mexican market. To maintain market competitiveness, Chinese exporters may need to absorb part or all of the tariff costs, which will compress their profit margins.

2. Decline in Export Volume: As import costs rise, Mexican importers may reduce their procurement volume of Chinese aluminum semis and aluminum products. This will lead to a decline in exports of related Chinese products, subsequently affecting the production and operations of relevant enterprises.

3. Market Structure Adjustment: Adjustments to Mexico's tariff policies may prompt Chinese aluminum semis and aluminum product exporters to seek other market opportunities to diversify risks. Simultaneously, this may also accelerate structural adjustments and industrial upgrading within the Chinese aluminum semis and aluminum products industry.

IV. Industry Response and Trend Outlook: Resilience Breakthrough, from "Price Competition" to "Value Competition"

Faced with escalating tariff barriers in Mexico, China's aluminum semis and aluminum products industry needs to build coping strategies from three aspects: market layout, product upgrade, and policy negotiation:

(I) Market Diversification: Penetration within Latin America and Exploration of Emerging Markets
Exporters should seek a diversified market layout to reduce dependence on a single market. By exploring new market channels, risks can be dispersed and new growth points can be found. After setbacks in the Mexican market, efforts can be increased to tap into the aluminum semis demand in Latin American countries such as Brazil and Argentina, while simultaneously laying out plans for infrastructure-driven markets like Southeast Asia and the Middle East to disperse single-market risks. Data shows that the export resilience of China's aluminum semis to non-Mexican markets remains, providing a foundation for structural adjustment.

(II) Product Upgrading: From "Commodity Goods" to "High Value-Added Products"
Enhance the added value and competitiveness of China's aluminum semis and aluminum products through technological innovation and quality improvement. This will help maintain market competitiveness under the tariff policy. Mexico's tariff increases primarily target low and mid-end aluminum products. The industry can accelerate upgrades towards areas such as industrial extrusion, automotive aluminum alloy, and high-end aluminum foil, using technological barriers to mitigate the impact of tariffs. For example, developing lightweight aluminum alloy components suitable for local Mexican automakers can break through trade restrictions through a "technical cooperation + local supporting" model.

(III) Policy Negotiation: Technical Consultations and Utilization of WTO Rules
Strengthen economic and trade cooperation with Mexico and other countries, promoting the signing of bilateral or multilateral trade agreements. Reduce trade barriers through international cooperation to create a more favorable environment for the export of China's aluminum semis and aluminum products. China has initiated trade and investment barrier investigations and pecan anti-dumping investigations. Subsequently, relying on the WTO framework, complaints can be filed regarding the "discriminatory" and "non-compliant" nature of Mexico's tariff policy. Simultaneously, through bilateral technical consultations between China and Mexico, strive for tariff exemptions or rate reductions for aluminum products (for instance, Mexico's suspension of the tariff proposal review in October 2025 created a window for consultations).

In summary, Mexico's tariff barriers pose short-term challenges for the export of China's aluminum semis and aluminum products, but the industry's resilience and transformation potential are clear. The core of future competition will shift from "price advantage" to comprehensive value competition based on "technology + service + localization." Only in this way can sustainable growth be achieved against the backdrop of normalized trade friction.

Appendix: Policy Overview: Systematic Escalation of Mexico's Tariff Policies Toward China in Recent Years (2023–2025)

1. The 2025 Tariff Reform Proposal Caused an Uproar

Policy Content: On September 10, 2025, Mexico released the "2026 Budget Revenue Proposal," which is expected to impose tariffs of 10%–50% on 1,371 categories of goods from non-free trade agreement countries, covering key sectors such as automobiles, steel, aluminum products, and textiles. The measure is projected to generate annual revenue of 70 billion pesos (approximately $3.76 billion). Among these, aluminum products (aluminum sheets, aluminum alloys) face tariffs of 10%–50%, directly impacting China's key exports to Mexico.

Political Motivations:

US Pressure: Under the USMCA framework, Mexico faces coercion from the US and must align with its "nearshoring" strategy to restrict Chinese goods from entering the US via Mexico.

Industrial Protection: Mexico's automotive and textile industries have long relied on imports from China. The tariff increase aims to raise the proportion of local supply chains to over 50%.

Fiscal Revenue Increase: The trade deficit between China and Mexico reached $71.067 billion in 2024. The Mexican government seeks to reduce dependence on China and fill budget gaps through tariffs.

Subsequent Turn of Events: After China initiated a trade and investment barriers investigation and a pecan anti-dumping investigation on September 25, Mexican President Sheinbaum announced on October 9 the suspension of the proposal's review, stating that legislation would follow "technical consultations" with China.

2. Intensive Tariff Adjustments Across Multiple Sectors in 2025

Anti-Dumping Investigation on Aluminum Products: On March 5, 2025, Mexico initiated an anti-dumping investigation on aluminum bar and rod profiles originating from China, involving tariff headings such as 7604.10.02 and 7604.29.01. The dumping investigation period covered July 1, 2023, to June 30, 2024.

Countervailing Duties on Electric Vehicles: In July 2025, countervailing duties of up to 35% were imposed on domestically produced electric vehicles (including Chinese brands), leading to a decline in market share for companies such as BYD.

Tariff Increase on Low-Value Parcels: In August 2025, tariffs on imported parcels valued under $2,500 were raised from 19% to 33.5%, primarily targeting e-commerce goods from China.

Final Ruling on Countervailing Duties for Footwear: In September 2025, countervailing duties of $0.54–$22.50 per pair were imposed on Chinese footwear (including sports shoes and sandals) with a selling price below $22.58, in addition to the existing 35% tariff, valid for five years. 3. Progressive Restrictions in 2023-2024

August 2023: Raised the most-favored-nation tariffs on 392 tariff line items, increasing the tax rates for products such as steel, aluminum, and chemicals to 25%, while explicitly excluding free trade partners like the United States and Canada.

December 2024: Initiated the second anti-dumping sunset review investigation on steel wire ropes originating from China, involving products under tariff lines such as 7312.10.01.

July 2024: Adjusted the rules of origin for aluminum products under the USMCA framework, requiring that primary aluminum and its melting and casting processes must be completed within the United States, Mexico, or Canada; otherwise, a 10% tariff would be imposed on products containing Chinese aluminum.