On April 22, local time, Mexican President Lopez Obrador signed a decree imposing temporary import duties of 5% to 50% on 544 goods such as steel, aluminum, textiles, clothing, footwear, wood, plastics and their products.
The decree came into effect on April 23 and is valid for two years. According to the decree, textiles, clothing, footwear and other products will be subject to a temporary import duty of 35%; Round steel with a diameter of less than 14 mm will be subject to a temporary import duty of 50%. Goods imported from regions and countries that have signed trade agreements with Mexico will enjoy preferential tariff treatment if they meet the relevant provisions of the agreements.
Gabriela Sillier, director of economic analysis at BASE Financial Group in Mexico, believes that the tariff measures could lead to increased inflationary pressures in Mexico and that "protectionism doesn't work anywhere."
To prevent unfair competition
Mexican Economy Minister Raquel Buenrostro said Tuesday that the government's goal is to "prevent unfair competition."
"We are seeing a lot of products coming into Mexico at very low prices and displacing our domestic producers," she said at a Council of the Americas event in Mexico City.
"... Prices at home are not going to go down, but cheap imports are displacing textile manufacturers, footwear manufacturers and other manufacturers, "she said." This worrying import is coming from countries that don't have trade agreements with Mexico."
At the same time, the Ministry of Economy of Mexico also said that the new tariffs are aimed at providing certain and fair market conditions for the national industrial sector facing a vulnerable situation, thereby promoting the development of national industries and supporting the internal market.
Previously, on August 16, 2023, Mexico raised import duties on 392 tariff items. Nearly 92 percent of the products in these tariff lines are now subject to the 25 percent import tariff, with only certain textiles subject to the 15 percent tariff. All of this is also for countries that do not have a free trade agreement with Mexico. It is valid until July 31, 2025.
The textile industry is developing rapidly
As one of the world's major textile and garment trading countries, the textile and garment industry plays an important role in Mexico's national economy. Mexico's textile and garment industry has a complete range of products, in addition to traditional Mexican textile products such as narrow blended fabrics, plain fabrics and knitted fabrics, but also a variety of yarns, fabrics, home textiles, non-woven fabrics and clothing. The Mexican fashion industry is also promoting the continuous innovation of scientific and technological clothing products and vigorously enhancing the competitiveness of the textile and garment industry. Some industry experts predict that the market size of Mexico's textile manufacturing industry will grow by $3.98 billion between 2021 and 2026, with a compound annual growth rate of 4.13%.
The most important market for Mexican exports is the United States, accounting for about 80 percent, with the remaining 20 percent going to Canada, China, Spain and Brazil. Overall, while U.S. apparel imports continue to be dominated by Asian suppliers in 2021, Western Hemisphere Free Trade Agreement suppliers, China - ASEAN Free Trade Area (CAFTA) countries, and partners in the United States, Mexico and Canada (USMCA) are all seeing strong growth. In 2021 alone, Mexican apparel exports to the United States increased by 21.52 percent. Industry experts predict that Mexico's garment exports could reach $7 billion this year. Strong sales of denim apparel, knitwear, T-shirts, underwear and socks were seen as key drivers of growth.
Surface accessories are imported in large quantities from China
Mexico is China's second largest trading partner in Latin America, and China is Mexico's second largest trading partner in the world. Bilateral trade volume between China and Mexico hit a new record high in 2021, increasing by 41.9% year-on-year to reach $86.6 billion. Due to a lack of fabrics, especially synthetic yarns, Mexico imports a lot of yarns and fabrics from countries such as China, India and Pakistan. At present, Mexico does not have the production advantage, so high-end functional fabrics, accessories and sportswear and fashion with complex processes mainly rely on imports. For China alone, accessories and fabrics are the first category of imports, and the import amount accounts for 50%; Followed by clothing, the import amount accounted for 29%; Nearly half of imports of home textiles and footwear come from China.
Exchange rate depreciation creates competitive pressure
Mexico's "Universo" reported on January 25 that due to the depreciation of the peso against the US dollar, the price of some imported raw materials has risen, resulting in a rise in the price of Mexican textile and clothing industrial products, in addition, the sector has also faced difficulties in underpricing and smuggling products, more intense competition from China, and increased imports of unfairly competitive products.
But the textile industry also said that under the same conditions, ink textile and clothing sector enterprises are able to compete, whether large enterprises or small and medium-sized enterprises have a lot of investment in technology.
Initiate anti-dumping review on Chinese and Indian polyester
On March 19, 2024, the Mexican Ministry of Economy issued a notice in the Official Gazette saying that polyester filaments originating in China and India (Spanish: poliester filamento textil texturizado independently initiated a review investigation during the anti-dumping period, and the dumping investigation period in this case is from October 1, 2022 to September 30, 2023, and the damage investigation period is from October 1, 2018 to September 30, 2023. The existing anti-dumping duties shall remain in force during the investigation of the case. The TIGIE tax number of the product involved is 5402.33.01. The announcement shall take effect the day after its promulgation.
According to Mexican customs data, in 2023, Mexico imported $56.66 million of products involved in the case from China, down 50% year-on-year. According to Chinese customs data, in 2023, our exports to Mexico involved in the case were 75.09 million US dollars, down 24.2% year on year.
On March 31, 2020, Mexico launched an anti-dumping investigation against polyester filaments originating in China and India. On September 29, 2021, Mexico made a final affirmative anti-dumping ruling on polyester filament from China and India, and decided to impose an anti-dumping duty of US $0.532 / kg on the products involved, but in view of the adverse impact of the novel coronavirus epidemic on the Mexican textile industry, decided to delay the imposition of anti-dumping duties for one year. After the first extension expired, Mexico extended the tax for another year. At present, the factory of the applicant in Mexico has closed down, and the case is likely to be withdrawn.
(Source: Xinhua News Agency, Global Network, China Textile Import and Export Chamber of Commerce, China Textile, Chemical Fiber State)