High US-dollar trade shortfall between Mexico and China reaches a peak at $57 billion over six months
Mexico Implements Tariff on Chinese Footwear Imports to Address Trade Deficit
Mexico has announced a 25% tariff on footwear imports from China, marking a strategic move to address its growing trade deficit with the Asian powerhouse. The deficit, which reached a record $57.5 billion in the first half of 2025, is largely due to imports exceeding $62.1 billion while exports to China remain low at about $4.6 billion.
The tariff was announced by Economy Minister Marcelo Ebrard, who said, "enough is enough." The move comes as Mexico coordinates with the United States to align protective measures against Chinese overcapacity and tariff circumvention. This collaboration aims to address shared concerns that China uses Mexico as a "backdoor" to circumvent U.S. tariffs through the USMCA free trade zone.
The tariff excludes Chinese footwear from the tax-free Maquiladora Manufacturing and Export Services Industry Program (IMMEX). Imports of footwear under the IMMEX Program increased from 3.79 million pairs in 2022 to more than 40 million in 2024, a significant increase that has contributed to the trade gap.
Juan Carlos Cashat, president of the National Footwear Industry Chamber, applauded the decision, stating that it would help strengthen Mexico's domestic manufacturing capacity and promote local production in the sector. The Mexican government has expressed its commitment to strengthening export capacity and implementing import substitution strategies.
In addition to the tariff, Mexico is boosting domestic manufacturing capacity in certain sectors, including furniture. Over the past decade, the trade gap between the two countries has doubled, and the over-reliance on China limits Mexico's technological development and reinforces a pattern of assembly rather than innovation. On Tuesday, the Confederation of Industrial Chambers (Concamin) called on Ebrard to protect the furniture sector from Chinese imports, with Concamin president Alejandro Malagón suggesting a 30% tariff to curb the influx of Chinese furniture.
Analysts warn that Mexico's over-reliance on China may pose structural challenges for domestic industries. Bilateral trade volume between Mexico and China surpassed US $110 billion in 2023, with the trade deficit reaching nearly US $120 billion in the previous year. Exports to China fell 4.5% year-to-year, marking a second consecutive year of decline in 2024.
The proposed tariff would apply only to finished furniture products and not to the inputs used by the sector. Lax oversight allowed a significant amount of the footwear to be diverted into the domestic market, contributing to the trade deficit. The Mexican government aims to mitigate tariff impacts by promoting local production of consumer goods and intermediate products that compete with Chinese imports.
Mexico's trade negotiations and diplomatic engagements with the U.S. are ongoing, with the aim of managing tariff threats while seeking to protect and expand Mexico’s exports. These negotiations influence Mexico’s approach to Chinese imports, if any tariff or non-tariff barriers to Chinese goods are imposed.
In summary, Mexico addresses its trade deficit with China by implementing targeted tariffs and non-tariff measures, promoting local production in vulnerable sectors such as footwear and furniture, attracting investment to enhance manufacturing, and engaging in strategic trade negotiations to limit the negative impact of Chinese imports and improve export performance.
The business sector in Mexico has welcomed the 25% tariff on Chinese footwear imports as a means to boost local production and foster economic growth in the footwear industry. In a related move, the Confederation of Industrial Chambers (Concamin) has called for a 30% tariff on Chinese furniture imports to protect Mexico's domestic manufacturing capacity in that sector.
