The increase in tariffs imposed by the Mexican government on 544 products imported mainly from China will have an ambiguous impact on the economy, Citibanamex indicated.
According to the analysis titled “Import tariffs directed at China?”, the bank highlighted that these tariff fractions represent only 2.5 percent of the total imported goods, and those from China constitute only 0.4 percent.
“It seems that the greatest impact after the tariff increase will be for other countries, more than for China,” said the financial institution.
At the end of April, the Ministry of Economy (SE) published a decree that modifies the Rate of the Law of General Import and Export Taxes with which it raised between five and 50 percent the tariffs on 544 products such as; steel, aluminum, textiles, clothing, footwear, wood, plastic, chemicals, paper and cardboard.
The department headed by Raquel Buenrostro justified the increase due to the growing implementation of new business models, such as nearshoring, which was necessary to avoid economic distortions that could affect the relocation of productive sectors considered strategic.
However, the bank indicated that the decree was issued in response to recent complaints from the United States towards Mexico, stating that the country is being used as a gateway for Chinese products destined for the US market to avoid paying tariffs.
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“Although it is not explicitly mentioned, it seems to refer to unfair trade practices, but it should be made explicit and then resort to the mechanisms established by the World Trade Organization (WTO), for these cases instead of applying tariff barriers,” he noted.
Citibanamex explained that imposing tariffs on imports has two effects, one is the increase in national production of the affected products, only if there is capacity, and the other is to increase the price for producers, and finally see that increase. reflected to consumers.
The bank noted that while the imposition of tariffs could increase tax revenue from the import of Chinese products from $780 million to $1.632 billion, this is unlikely because tariffs discourage imports, and would have the opposite effect.
“It is expected that Mexican buyers who require such products will look for alternatives in countries with which they have a trade agreement,” the bank said.
Citibanamex concluded that, given the limited impact that these tariffs will have on imports from China, it seems that the objective of the decree is to reduce pressures from the United States related to trade triangulation.
In addition, he pointed out that the main consequence of this measure could be the generation of price pressures and will make it difficult for the Bank of Mexico to achieve the inflation goal, expected until the fourth quarter of 2025.
2024-05-16 01:18:06
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