Mexico will keep its tariffs of up to 50% on cars from China and other countries without a trade agreement, the Economy Ministry told the country's car dealers on Oct. 20, even as Chinese automakers hold off on factory plans that one consultant valued at $45 billion over the next decade.

For Asian investors the standoff matters on two fronts. Mexico was the biggest overseas market for Chinese-built cars as recently as November 2025, and the value of Chinese car imports fell by about $1.19 billion in the first half of 2026 alone. And the obvious workaround, building cars inside Mexico, is frozen while Washington, Mexico City and Ottawa review the U.S.-Mexico-Canada Agreement (USMCA).

Mexico's tariff on Chinese cars stays

Carlos Castillo, head of the Economy Ministry's productive development unit, told the Mexican Automotive Dealers Association (AMDA) forum by video message that the duties were meant to defend domestic factories against unfair trade, El Economista reported. The measures "deben mantenerse," or must be kept, he said, as part of a broader industrial policy under President Claudia Sheinbaum's Plan Mexico.

The tariffs took effect on Jan. 1 and cover 1,463 tariff lines, with rates from 5% to 50%, on goods from economies that lack a trade deal with Mexico. Finished cars from China face the top rate. Economy Secretary Marcelo Ebrard has said the duties cut vehicle imports by 70%, according to El Economista, which did not give the period or the data behind that figure.

The ministry's own half-year numbers are more modest. Imports of Chinese cars fell 31.1% in the first six months of 2026 to 158,571 units, and their value dropped 35.4% to $2.16 billion, according to ministry data reported by El Economista and republished by Colombia's La República. Across all 1,463 lines, China's shipments fell 26.3% to $8.87 billion. South Korea's fell 22.6% to $1.29 billion and Taiwan's 32.5% to $276 million.

The early months were sharper. Chinese customs data showed car shipments to Mexico of $188 million in January, down 45.3% from a year earlier and 82.3% below a November 2025 peak of $1.06 billion, Mexico News Daily reported. Mexico went from the top destination for Chinese-made cars in November to 16th in January.

Demand for Chinese brands has not collapsed. Sales of nine Chinese brands that report to Mexico's statistics agency rose 25.3% to 42,808 units in the first quarter, Mexico News Daily said, with Geely up 272.2%. BYD does not report to the agency, so the official count leaves out one of the biggest Chinese brands. Chinese automakers are still shipping record volumes worldwide: BYD's exports doubled in October.

Chinese automakers put Mexican plants on hold

Building locally would let Chinese brands avoid the duty, but most have stopped short. BYD, Chery (sold in Mexico as Chirey), MG, Geely, Great Wall Motor and GAC have all paused plans for Mexican assembly plants, El Economista reported on Oct. 1. BYD dropped a plant after announcing interest twice. MG had planned to invest $1.05 billion without naming a site or start date. GAC had said early this year it would start production in Mexico by mid-2026, possibly at a Japanese partner's facility, but pushed the decision to year-end.

Geely was still weighing the former Nissan and Mercedes-Benz plant in Aguascalientes, known as COMPAS, with nothing agreed, the paper said. The plant has capacity for 230,000 vehicles a year, La Crónica de Hoy reported in February, citing Reuters. The paper also reported, citing Reuters, that the federal government had asked state authorities to pause Chinese auto investments until the USMCA is renegotiated.

Kenneth Smith Ramos, a former Mexican USMCA negotiator, told El Economista the pause reflects legal uncertainty and U.S. pressure, not a loss of interest in Latin America. Chinese carmakers fear the review could cap the share of Chinese parts a Mexican-built car may contain and still qualify for duty-free access to the U.S., he said. Brazil, by contrast, has drawn more than $6.5 billion in Chinese assembly investment, according to the paper.

Where the $45 billion could go

Guido Vildozo, a consultant at Mobility Global, told the AMDA forum that Mexico risks losing part of roughly $45 billion that Chinese automakers plan to spend on plants over 10 years, with some of it potentially going to the U.S. or Canada, El Economista reported. He said U.S. President Donald Trump has signaled openness to Chinese carmakers building in the U.S.

Vildozo said a plant of the kind Chinese groups are building in Turkey, India and Indonesia costs about $4 billion and needs sales of about 250,000 units a year. Mexico's market for Chinese brands is not yet that large, he said, though he projects their share will reach 30% by 2030 even without local factories.

Other carmakers are filling the gap the tariff opened. Castillo cited a $1 billion General Motors plan to build models in Mexico for the local market from next year, with capacity of up to 80,000 units a year by 2030, and a $650 million Kia investment in electric vehicles for Mexico and the U.S. Kia's latest numbers show how much tariff terms matter to Asian automakers: its third-quarter operating profit rose 24.3% on tariff relief.

The next signal for Chinese investors will come from the USMCA review, where the rules of origin for cars, now 75% regional content, are the issue Chinese brands are waiting on.