Mexico tightens tariffs, follows Trump’s path and threatens Brazilian exports

Measure rushed through Mexico’s Congress could affect US$1.7 billion in Brazilian exports and puts pressure on companies that used the country as a route to bypass U.S. tariffs

Claudia Sheinbaum, President of Mexico

By: SiiLA News

12/22/2025

The protectionist trade policy that has gained strength in the United States in recent years is now beginning to reverberate across Latin America. Nearly a year after President Donald Trump announced tougher tariffs against a number of countries, Mexico approved a package of tariff increases that could directly affect Brazil and other major exporters without free trade agreements with the country.

The measure, rushed through the Mexican Congress and now awaiting approval by President Claudia Sheinbaum, establishes import tariffs of up to 50% on products from 19 industrial sectors. According to Brazil’s National Confederation of Industry (CNI), the potential impact on Brazilian exports could reach US$1.7 billion, equivalent to 14.7% of Brazil’s total sales to Mexico.

Experts note that Mexico’s move does not occur in isolation. For James Onnig, a professor of Geopolitics at the International Relations Research Laboratory at FACAMP, the decision is directly linked to pressure exerted by the United States.

“The impact could reach as much as US$1 billion. However, if we look at it very closely, what may be more concerning is not the tariff itself, but the fact that Brazil and Mexico had been making progress in free trade negotiations, which would have provided relief for both economies. Mexico has not made it clear whether these negotiations will continue,” he explains.

Mexico has been accused by Washington of serving as an indirect route for foreign companies to access the U.S. market, circumventing tariffs imposed by the Trump administration — especially in the case of Chinese products, but also involving Latin American companies.

Brazil among the most affected

According to the CNI, Brazil is among the five countries most impacted by the new tariff policy. In total, 232 products from Brazil’s manufacturing industry could be affected, including steel, auto parts, household appliances, textiles, furniture, and aluminum.

The effect is amplified by the fact that 95% of Brazilian products exported to Mexico compete directly with goods from the United States and the European Union, regions that already have free trade agreements with the country. In practice, this reduces the competitiveness of Brazilian products in the Mexican market.

In addition, the trade agreements currently in force between Brazil and Mexico are considered insufficient to offset the impact. According to the CNI, 40.2% of the potentially affected value lacks adequate tariff coverage or benefits only from limited preferences.

Onnig notes that one possible response from Brazil would be reciprocal measures.

“Reciprocal measures could be the key. Brazil imposes measures on its side and Mexico does the same on theirs, which then opens room for negotiation. I think that’s what Mexico wants. We’ll see whether the U.S. accepts it, and that would be a victory for President Claudia Sheinbaum,” he explains.

Brazilian companies in Mexico come under scrutiny

In recent years, Mexico has established itself as a strategic industrial hub for Brazilian companies. Firms such as WEG and Gerdau lead Brazilian investments in the country, totaling around US$900 million, leveraging proximity to the U.S. and Mexico’s industrial infrastructure.

Data from SiiLA show that between 2024 and 2025, the area occupied by Brazilian companies in Mexico grew by 3%. With the new tariff package, however, this strategy is now being reassessed.

Impacto gradual, mas persistente

For José Ignacio Martínez Cortés, PhD in Economics and head of the Laboratory for Analysis in Trade, Economics, and Business (LACEN-UNAM), the effects of the measure are unlikely to be immediate, but rather progressive.

According to him, higher costs for intermediate and capital goods tend to spread through production chains over time, especially in sectors that already operate with tight margins.

The expectation is that clearer impacts will begin to be felt from the first quarter of 2026, putting pressure on prices, investment, and industrial location decisions.

More than a technical adjustment, Mexico’s decision signals a structural shift in international trade, marked by greater regionalization, selective protectionism, and geopolitical disputes that go beyond tariffs — and are beginning to directly influence industrial, logistics, and real estate strategies.

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