South Korea prepares response to Mexico's tariff hike plan

The South Korean government is taking steps to address Mexico's planned tariff hikes, a move that threatens to disrupt supply chains and raise costs for major South Korean companies.

The tariffs, which are part of Mexico's new legislative initiative, are expected to target 1,463 product classifications, a significant increase from previous measures.

Affected items include auto parts, steel, home appliances, and textiles — all sectors where South Korean firms have a major presence.

South Korean firms, including Kia Motors, have heavily invested in Mexico, using it as an export hub to the United States under the USMCA (United States-Mexico-Canada Agreement) trade pact. These companies often import raw materials and components from South Korea for assembly in Mexico, making them vulnerable to new import duties.

A Ministry of Trade, Industry and Energy official said, "We will work closely with industry and local embassies to minimize impacts on our companies through thorough monitoring."

In the past, South Korean companies have used Mexico's tariff reduction programs, such as PROSEC (Program for Sectoral Promotion) and IMMEX (Manufacturing, Maquila, and Export Service Industry), to mitigate the effects of tariffs.

However, the details of Mexico's new tariff plans are still unclear, raising concerns about whether these existing programs will be sufficient to absorb the economic impact.

Mexican President Claudia Sheinbaum has stated that the tariffs are intended to protect domestic industries and are not aimed at any specific country. Despite this, South Korea is among the countries without a free trade agreement with Mexico that could be significantly affected.

The new measures are currently under review by the Mexican Chamber of Deputies and, if approved, could take effect as early as Jan. 1 next year.

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