Fri Feb 06 08:44:53 UTC 2026: Headline: India Faces Double Tariff Blow as US and Mexico Impose Trade Barriers

The Story:
Indian industries are reeling from the combined impact of tariffs imposed by the United States and Mexico. Steel, automotive, and other sectors are facing significant losses as a result of these trade restrictions. The US initially imposed tariffs on India in August 2025 as a punitive measure for its continued purchase of Russian oil, while Mexico implemented tariffs ranging from 5% to 50% on over 1,400 products from non-free trade nations, including India, on January 1, 2026.

The tariffs are significantly impacting Indian businesses, with some reporting losses of up to 50% in sales to the affected countries. While the Indian government has taken some measures to alleviate the pain, such as allowing manufacturing units in special economic zones to sell a portion of their output domestically at concessional duty rates, industry leaders are advocating for diversification and preferential trade agreements.

Key Points:

  • The US imposed tariffs on India in August 2025 due to its purchase of Russian oil.
  • Mexico implemented tariffs ranging from 5% to 50% on over 1,400 products from non-free trade nations, including India, on January 1, 2026.
  • Indian businesses are experiencing significant losses, with some reporting sales declines of up to 50% in the US and Mexico.
  • India exported goods worth $5.6 billion to Mexico in 2024, led by vehicles and components and followed by electronic equipment.
  • Steel exports face the steepest hike of 50%, followed by auto and auto components at 35%.
  • Industry bodies are urging the Indian government to pursue preferential trade agreements with Mexico.

Critical Analysis:

The series of events indicates a rising trend of protectionist trade policies impacting India. The US tariffs, initially driven by geopolitical considerations (India’s relationship with Russia), have now been compounded by Mexico’s strategic realignment. Mexico’s decision to impose tariffs on non-FTA nations is likely influenced by the pressure from the US to prevent trans-shipment and supply-chain diversion, potentially to avoid scrutiny during the USMCA review.

Key Takeaways:

  • Indian industries are vulnerable to fluctuations in global trade policies and geopolitical pressures.
  • Diversification of export markets is crucial for mitigating risks associated with dependence on specific countries.
  • The US-Mexico-Canada Agreement (USMCA) and the possibility of its review are significantly influencing trade policy decisions in Mexico.
  • The Indian government needs to actively pursue trade agreements to protect its economic interests.
  • Trade relationships between countries, especially India, Russia, the US and Mexico, is increasingly complex and shifting.

Impact Analysis:

The combined impact of the US and Mexico tariffs could have long-term implications for Indian industries. Reduced exports may lead to job losses, decreased investment in certain sectors, and slower economic growth. The shift toward protectionism could also disrupt global supply chains and raise prices for consumers. To mitigate these impacts, India needs to adopt a proactive approach by fostering stronger trade relationships with other countries, enhancing domestic demand, and promoting innovation to improve competitiveness. The situation necessitates a strategic recalibration of India’s trade policy to navigate the evolving global landscape.

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