Leopard 8 is one of the Fang Cheng Bao brands of Three Cars Byd, announced at Deep Shenzhen on April 16, 2024.
CNBC | Evelyn Cheng
BEIJING – China’s Commerce Ministry plans to raise tariffs on Asian-made cars to 50%, so Mexico warns its measures.
We hope that Mexico is extremely cautious and thinks well before acting,” the department said in a statement late Thursday.
“China and Mexico are mutually important trading partners,” the ministry said. “We don’t want to see economic cooperation from both parties affected by this situation.”
Mexico’s economy secretary, Marcelo Ebrard, told reporters Wednesday that the country plans to raise tariffs on vehicles from Asia, particularly China, from the current 20% to 50%. The increase in obligations still requires Congressional approval, and the tariffs will take effect in 30 days, he said.
“China will take necessary measures… to firmly protect its legitimate rights and interests,” the Chinese statement read.
In the face of “tax abuse,” China said countries should protect free trade. “The coercion of others should not be at the expense of third parties’ interests.”
According to a report by the Wall Street Journal, Mexico’s planned Chinese tariffs are part of a broader federal budget proposal that will affect imports worth $52 billion.
In the ongoing trade tensions with the US, China’s measures include restrictions on exporting minerals essential to the production of automobiles and other advanced technologies. Chinese companies have come to control the supply chain due to many of these minerals.
Sitting on the US southern border, Mexico benefits from the US-Mexico-Canada Agreement, or the USMCA, for country’s tariff-free trade. However, the USMCA, which came into effect in 2020, requires that a much larger portion of the vehicle be made in the region than the North American free trade agreement it replaced.
The Mexican automotive industry previously told CNBC that it is a partner at DC Global Advisors, based in Jorge Guajardo, Washington, the country’s largest employer. He is a former ambassador to Mexico.
“At 50%, the tariffs are lower than the 60% tariffs that Russia applies to Chinese cars,” Guahardo told CNBC in an email Friday. “I haven’t seen China label the same (compulsory) accusations in Russia or Brazil, but I think it’s an implicit agreement that they understand that they don’t have an appetite to absorb China’s excess capacity.” In July, Brazil announced a 35% tariff on electric vehicle imports.
Chinese officials told CNBC last year, adding that if China produces too many electric vehicles, other countries have dominated global exports of liquefied natural gas, agricultural products and high-end semiconductors.
From June 2022 to July 2024, more than 20 Chinese auto parts and manufacturers announced more than $7 billion in investments in Mexico, according to the prosperous American coalition, advocacy group.
It is unknown how many projects have been completed. Chinese electric car giant byd The long-awaited factory has not yet been built in Mexico.
According to figures from China’s Passenger Automobile Association earlier this year, the Central American country was a destination for Chinese automobile exports.
“What’s very important about Chinese cars is where they’re taking market share, it’s not actually from Western brands. It’s really from other Asian brands. It’s Eugene Fuciao, Macquarie Capital, the head of China’s equity strategy, as seen in Mexico.”
However, even suggesting that the job duties at the time increased by 25%, Hsiao said he expects “I think the value proposition for many of these Chinese cars will remain intact even for some of these tariffs.”
