At the end of 2024, the Mexican government issued a series of new trade policies, mainly targeting imports from countries such as China, as well as transactions on cross-border e-commerce platforms. It has decided to impose a 35% import tariff on more than 100 imported textiles and a 16% value-added tax (VAT) on cross-border e-commerce platforms. The implementation of these new policies will have a direct impact on the competitive environment of Chinese exporters and global e-commerce platforms in Mexico. Chinese cross-border e-commerce companies "Temu" and "SHEIN" are believed to be targets. After Trump's election, the Mexican government has taken a tough stance against Chinese products.
Mexico's General Administration of Taxation (SAT) introduced a new regulation on January 1 to impose tariffs of 17 to 19 percent on small goods imported through Courier companies. Chinese cross-border e-commerce companies "Temu" and "SHEIN" are believed to have been targeted, and Mexico's General Tax Administration declared a "battle against smuggling" in a statement.
For Mexico, the imposition of new tariffs is a clear gesture of goodwill to the new administration of Donald Trump in the United States. In fact, since Donald Trump, who has been criticizing Mexico for its tolerance of Chinese products, was re-elected as U.S. president, the Mexican government has taken a tough stance against Chinese products one after another.
1. Impose a 35% tariff on Chinese textiles
Mexico announced a 35% import tariff on 138 textile and ready-to-wear products and a 15% tariff on 17 textile raw materials. This policy is effective from December 20, 2024 and applies to countries that do not have a free trade agreement with Mexico, including China.
Policy background and impact:
The aim is to protect the country's textile and garment industry, which employs around 500,000 people. The new tariffs could significantly affect China's textile exports to Mexico. China is currently the largest source of imports of Mexican textiles, with exports reaching $14.532 billion in the first three quarters of 2024. For Chinese exporters, the new tariffs will increase costs, weaken competitiveness or lead to lower exports.
2. Impose a 16% value-added tax on cross-border e-commerce platforms
From January 1, 2025, Mexico will impose a 16 percent value-added tax on goods and services sold on all foreign e-commerce platforms, including Shein, Temu, Amazon, and others.
1) Policy Details:
Eliminate VAT exemption for purchases of less than $50 per purchase. Foreign businesses that use local warehousing services in Mexico are required to register a value-added tax number (RFC), and unregistered sellers are subject to higher tax withholding.
2) Possible impact:
The higher operating costs of cross-border e-commerce platforms may be passed on to consumers. Chinese companies need to optimize their tax compliance strategies and ensure they register an RFC number to avoid higher tax withholding. The move, which aims to increase government tax revenue and strengthen regulation of cross-border e-commerce, is expected to generate 15 billion pesos in tax revenue for Mexico.
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