Tariff Tension! Mexico Imitates Trump, Slaps 50% Tariffs On India; Which Sectors To Take Hit? Winners & Losers

In a surprising move, Mexico takes a leaf out of US President Donald Trump's handbook and declares 50% additional tariffs on most Indian goods. Mexico announced 50% tariffs on a host of Asian countries, including India, escalating trade tensions between these regions. However, the Indian stock market is unbothered by the trade impact due to tariffs, as both Sensex and Nifty rally on December 12.

Mexico-India Tariffs!

The new tariffs by Mexico range from 5% to 50% on more than 1,450 products, and they will come into effect on January 1, 2026, for any country that does not have a Free Trade Agreement (FTA) with them.

Mexico imposed 50% tariffs on products like automobile parts, lightweight cars, household appliances, toys, textiles, clothing, plastics, steel, furniture, footwear, leather goods, paper, cardboard, motorcycles, aluminum, perfumes, cosmetics, trailers, glass, and soaps, as per the EI Universal report, which is a Mexican daily.

Asian countries that do not have a trade deal with Mexico are likely to take a hit. These include India, South Korea, China, Thailand, and Indonesia.

It needs to be noted that Mexican President Claudia Sheinbaum's government took this decision amidst intensive pressure from the White House to lessen trade ties with China. However, the opposition has warned Sheinbaum's government of a surge in costs due to these higher tariffs.

Mexico-India Trade Deals:

As per the Confederation of Indian Industry (CII) 2024 report, Mexico is the 31st largest trading partner of India and India and Mexico bilateral trade has grown over the past five years reaching a total of over $8.4 billion in 2023-24 from $7.9 billion in 2019-2020, with an average growth rate of 1.6% Compound Annual Growth Rate (CAGR) over the past five years.

The data further said, Indian exports to Mexico grew from $3.6 billion 2019-20 to over $5.3 billion in 2023-24, or at a rate of 10.1% CAGR over the five-year period.

Also, India's trade balance with Mexico was approximately $-0.7 billion in 2019-20 but became more favourable at $2.2 billion in 2023-24 as imports from Mexico have decreased.

India-Mexico Companies

Both Indian and Mexican companies have invested in the two countries. They also have a huge tie-up. Such as, the three strongest performing areas for Indian investments in Mexico are information technology, pharmaceuticals, and automotive sectors.

As per the Embassy Of India Mexico City data, almost all major Indian IT and ICT companies (TCS, Infosys, Tech Mahindra, Aptech, Hexaware, Wipro, Patni Computer Systems, Birlasoft etc.) have operations in Mexico. Several Indian pharmaceuticals firms (Lupin, Dr. Reddy's Laboratories, Zydus, Claris Life Sciences, Hetero Drugs, Sun Pharma, and Solara) have investments and operations in Mexico. In the food processing sector, Parle has recently started manufacturing in the State of Mexico.

Indian companies have also invested in manufacturing auto parts, tyres, packaging, and electricals.

Like, TORNEL, which makes tyres for cars and trucks in Mexico, is owned by JK Tyre, an Indian company. Bajaj Auto has a tie-up in Mexico for assembling and marketing two-wheelers (motorcycles) and three-wheelers. The Samvardhana Motherson Group (SMP) of India has investments in Puebla, San Luis Potosí and other northern states, manufacturing auto components for Original Equipment Manufacturers like Audi and VW.

Also, there are sizeable Indian investments in the north of the country, such as Flex Americas in Tamaulipas, Varroc Lighting (making modular LED lighting units for the auto clusters) KEC etc. in Monterrey.

It isn't just Indian companies; many large and renowned Mexican companies like Cinépolis, Tremec, Nemak, Softec, Metalsa, Ruhrpumpen, KidZania and Bimbo and some others have likewise invested in India in recent times.

NEMAK, which is part of the ALFA Group of Mexico has invested 11 million USD in a manufacturing facility in Chennai. SOFTTEK, an IT company from Monterrey recently become the first Latin American company to invest in the service sector in India, when it invested 26 million USD in acquiring an Indian company in Bangalore. Great Foods & Beverages of Mexico has invested about 10 million USD in India and has a great future for its fruit chill bars and noodles.

Why Indian Stock Market Is Rising?

Despite the latest 50% tariffs, Sensex and Nifty surged by more than 0.5%.

At the time of writing, Sensex traded at 85,212.61 , up by 394.40 points or 0.5%. The benchmark was near its intraday high of 85,282.76. Stocks like Tata Steel, L&T, Eternal, Maruti Suzuki and Ultratech Cement are top gainers.

Meanwhile, Nifty 50 surged by 112.05 points or 0.43% to trade at 26,029.65, which is also near its intraday high of 26,038.40. Nifty Auto was up 0.3%, Nifty IT also gained marginally. Nifty Metal skyrocketed by more than 2%, emerging as top bull. Further, Nifty Private Bank, Nifty Realthy, Nifty Consumer Durables, and Nifty Pharma recorded marginal to nearly 1% upside.

What Is Driving Indian Stock Market?

According to Ponmudi R, CEO of Enrich Money, domestic markets opened with a strong bullish gap-up, confirming the momentum shift that began yesterday after all major indices retested their rising channel supports. Yesterday's reversal candle has now received full follow-through, and today's gap-up clearly shows buyers reclaiming control of the trend. Despite ongoing macro uncertainty and persistent rupee weakness, the price structure across Nifty, Bank Nifty and Sensex indicates that the broader uptrend remains intact and highly responsive at key technical levels.

Overall, sentiment remains supported by global stability following the recent US Fed rate cut and easing crude oil prices, although foreign fund outflows and rupee weakness keep traders somewhat cautious. The broader setup suggests a continuation of range-bound movement unless a clear breakout emerges, as per Aakash Shah, Technical Research Analyst at Choice Equity Broking Private.