Mexico — Decreto LIGIE reform raising MFN duties on 1,463 tariff lines for non-FTA imports (DOF 29 Dec 2025)

Mechanism

The decree is a statutory amendment to the LIGIE (Ley de los Impuestos Generales de Importación y de Exportación), distinct from prior executive-order tariff actions. The Chamber of Deputies approved the reform in general 9 December 2025 (281–24, with abstentions); Senate approval followed in mid-December; the President signed and published the decree in the DOF on 29 December 2025; it entered into force 1 January 2026.

Coverage. 1,463 tariff fractions across more than 20 TIGIE chapters. Approximately 316 of those fractions had been duty-free under the prior MFN schedule and now carry positive duties.

Rate structure.

• Most lines: 10–25% ad valorem.
• Steel, aluminum, glass, ceramics, certain heavy-industry inputs: 25–35%.
• Footwear, certain apparel, leather goods: 25–50%.
• Finished passenger vehicles (HS 8703, ICE/hybrid + BEV from non-FTA

states): 50% — this codifies at LIGIE-statute level the executive order Sheinbaum issued in September 2024.

• Approximately 316 lines that were duty-free move to a positive rate

(typically 5–15%).

Origin-conditional. Like the December 2024 textile decree, the new rates apply only to goods originating in countries WITHOUT a free trade agreement in force with Mexico. The principal affected origin states are China, South Korea, India, Vietnam, Thailand, Brazil, Indonesia, Chinese Taipei, the UAE, and South Africa. USMCA partners (US, Canada) and other FTA partners are unaffected when origin requirements are met.

Legal authority. Unlike the December 2024 textile decree (which was an executive-order temporary measure with a 23-Apr-2026 sunset), this is a statutory reform to the LIGIE itself. There is no embedded sunset clause; the rates are permanent until further Congressional amendment.

Fiscal scope. SHCP / Hacienda estimate additional customs revenue of approximately MXN 70 bn / year (~USD 3.8 bn at end-2025 FX). The broader 2026 Economic Package projects an additional MXN 3.49 bn in customs tax revenue specifically attributed to LIGIE/customs modernisation alongside this tariff reform.

Downstream implications

• Mexico–China trade architecture. Functionally a structural

realignment of Mexico's import sourcing toward USMCA + FTA partners. Combined with the December 2024 textile decree and the 2024–25 IMMEX restrictions, this forecloses the principal "back-door" routes via which Chinese-origin goods (apparel via Shein/Temu; finished vehicles via BYD/Chery/SAIC; appliances; steel; auto parts) had been entering the US market through Mexico.

• USMCA 2026 review positioning. The decree is an explicit

pre-emptive move ahead of the July 2026 USMCA six-year joint review. USTR has flagged Mexico's role as a Chinese-goods conduit as a renegotiation priority; the LIGIE reform addresses that pressure at statutory rather than executive level, raising reversal cost.

• Plan México operational instrument. Plan México

(2025-01-21-mexico-plan-mexico-nearshoring-decree) is a fiscal- incentive framework lacking a tariff arm. This decree supplies that arm: the import-substitution side of the same policy package. The two should be consumed jointly.

• Chinese OEM Mexico-plant economics. BYD's announced plants

(and Chery, Great Wall, Geely interest) face a sharply altered investment calculus: the 50% MFN on finished vehicles raises the breakeven volume for local assembly, but USMCA-origin rules require ~75% North American value content for duty-free US export — a threshold Chinese OEMs cannot meet near-term. Net: the decree pushes toward a "sell to Mexican domestic market only" posture rather than a Mexico-as-North-American-export-platform posture.

• Korea, Vietnam, Thailand, India. Mexico has no FTA in force

with these states. Hyundai/Kia (KR), Samsung/LG appliances (KR), Vietnamese textile/footwear, Thai auto components, Indian pharmaceutical and chemical exports all face the new MFN schedule. Mexico–Korea FTA negotiations have been intermittent since 2008 — this decree raises the political pressure to conclude.

• Inflation pass-through. Banxico has flagged the tariff layer

as a 2026 H1 inflation risk; affected categories represent ~6–8% of the CPI consumer basket. Pass-through is partial because USMCA- origin substitution is feasible in many lines, but immediate shelf-price effects in apparel, footwear, electronics and toys are likely.

Open questions

• Final Senate vote tally (search results indicate mid-December 2025

passage but I have not confirmed exact date or vote counts here).

• Specific mechanisms the Secretaría de Economía will publish under

the decree's authorisation — whether tariff-rate quotas, transitional arrangements, or origin-verification protocols are issued for non-FTA imports.

• Treatment of IMMEX / maquila imports of dutiable inputs from

non-FTA states — Foley & Lardner flag that maquilas are NOT exempt, which is a material change from prior treatment.

• Whether Mexico–Korea or Mexico–UK FTA negotiations accelerate as

affected exporters lobby for preferential access.

• Inflation pass-through magnitude — Banxico February 2026 inflation

report should provide first-pass empirical estimate.

• Whether USTR formally welcomes the measure as USMCA-positive or

flags any rule-of-origin concerns ahead of the July 2026 review.