Congress Approves Tariff Law Reform: What Are the Implications?

Early Wednesday morning, the Chamber of Deputies gave general approval to the reform of the Tariff Law, specifically the Law on General Import and Export Taxes, a move aimed at redrawing the country’s commercial landscape for the coming year. Furthermore, the initiative seeks to increase tariffs by up to 50% on thousands of products primarily from China and other Asian countries, in an attempt to strengthen national production, rebalance foreign trade, and protect sectors deemed strategic.

The proposal, driven by the government of President Claudia Sheinbaum, still requires Senate approval. At 2:30 AM, the Plenary granted its endorsement with 281 votes in favor, 24 against, and an unprecedented 149 abstentions, making this vote one of the most atypical of the legislative session.

What Does the Tariff Law Reform Propose?

-Modify 1,463 tariff lines across 17 strategic sectors. -Increase

by up to 50% on thousands of products from countries without a free trade agreement with Mexico. -Maintain most adjustments between 20% and 35% throughout 2026. -Prioritize sectors such as: -automotive and auto parts -textiles and apparel -steel -plastic -footwear -furniture -home appliances -toys -aluminum, glass, and cosmetics

It should be noted that the involved sectors account for 51.91 billion dollars in imports, representing 8.3% of Mexico’s total imports in 2024.

According to Miguel Ángel Salim (PAN), President of the Commission on Trade, Competitiveness, and Economy, the initiative incorporates contributions from 27 business chambers and national associations, though this did not quell criticism from industrial groups anticipating productive disruptions.

A “Temporary and Transitory” Package, According to Morena

For the ruling party’s caucus, the move is strategic. Claudia Selene Ávila, a Morena deputy, argued that out of nearly 9,000 total tariff lines in the country, only about 16% are being adjusted—and on a temporary basis.

Morena asserts that Mexico imports 120 billion pesos from China but exports only 10 billion, a gap they deem unsustainable. Furthermore, they assure that the inflationary impact would be minimal, as an increase of 0.03% in the basic consumer basket is estimated.

The tariffs are focused solely on products that Mexico can indeed produce, thereby avoiding conflicts with the WTO and without violating current trade agreements. “Trade is not being closed off, but rather we seek a level playing field to compete under symmetrical conditions,” Ávila emphasized.

Why Business Sectors Raised Alarms Over the Tariff Law Reform?

While the reform is presented as a shield for national industry, some sectors perceive a real chain reaction risk. Deputy Gloria López (MC) stated that if essential inputs not produced in Mexico or the USMCA region are affected, it risks generating supply chain disruptions, thereby increasing the cost of final products.

Among the red flags they warn about: -Electronic automotive components, such as digital screens, which Mexico does not produce. -Essential intermediate goods, which represent 77% of the country’s total imports. -The risk of costs being directly passed on to consumers.

This point is particularly concerning for the Mexican automotive industry, one of the largest globally, which relies on Asian inputs to maintain its assembly lines.

What Are the Implications for Businesses and Consumers?

The reform not only addresses foreign trade: it also alters how Mexican companies will plan their operations for 2026.

Possible Effects for Industry: -Increased manufacturing costs for operations dependent on Asian inputs. -Reconfiguration of supply chains, necessitating the search for local or USMCA-region suppliers. -Opportunities for national suppliers, especially in textiles, plastics, furniture, and footwear. -Risks of delays if Asian inputs cannot be quickly substituted.

Possible Effects for Consumers: -Moderate price increases for final goods sensitive to electronic or textile inputs. -Changes in the availability of imported products. -Indirect benefits if new productive investments are generated in Mexico.