Source: Yicai Global

Author: Feng Dikan

On September 25, 2025, the Ministry of Commerce issued Announcement No. 53 of 2025, initiating a trade and investment barrier investigation into Mexico's relevant restrictive measures concerning China.

A spokesperson for the Ministry of Commerce stated in response that China believes, against the backdrop of the US's abusive imposition of tariffs, all countries should jointly oppose all forms of unilateralism and protectionism, and must never sacrifice the interests of third parties due to coercion by others. Once Mexico's unilateral tariff increase measure is implemented, even if it is within the WTO framework, it would harm the interests of relevant trading partners, including China, and would also seriously affect the certainty of Mexico's business environment, reducing enterprises' confidence in investing in Mexico. China firmly opposes this.

The spokesperson further stated that to resolutely safeguard the interests of relevant Chinese industries, the Ministry of Commerce has decided to initiate a trade and investment barrier investigation into restrictive measures such as Mexico's proposed tariff increases on imports from China, in accordance with the relevant provisions of the Foreign Trade Law of the People's Republic of China and the Rules on Foreign Trade Barrier Investigation.

Jian GUAN, a partner at Beijing Grandwin Law Firm, said in an exclusive interview with a Yicai Global reporter that the Rules on Foreign Trade Barrier Investigation stipulate two scenarios constituting a trade barrier: first, measures violate multilateral or bilateral agreements and treaties; second, measures cause negative trade and investment impacts.

Therefore, China certainly has the right to initiate the aforementioned investigation against Mexico. Jian GUAN explained, "The existence of either of the above scenarios can constitute a trade or investment barrier. Violating agreements or treaties is not a prerequisite for initiating a trade and investment barrier investigation. As long as the relevant measures or practices cause or are likely to cause negative trade and investment impacts, that is sufficient to constitute a trade or investment barrier."

Origin of the Investigation

Yicai Global: What is the origin of this investigation? What specific content do Mexico's proposed measures involve?

Jian GUAN: The investigation originates from a tariff reform proposal submitted by Mexico's federal executive branch to its Congress on September 9, 2025. The core content involves modifying several tariff items in the Import and Export General Tariff Act to increase tariff levels on certain imported goods. According to official documents and public reports, these proposed measures involve 1,463 tariff items, covering a wide range, including automobiles, motorcycles, trailers; textiles and clothing; footwear and leather products; plastics and rubber products; iron and steel products; machinery and electrical equipment; furniture; toys; paper and paperboard; glass and ceramic products, among various industrial sectors. In terms of tariff magnitude, the proposal indicates tariffs on most products are planned to be increased to around 35%, while rates for some products might be raised to 50%. These proposed measures apply only to imported products from countries and regions that do not have a free trade agreement with Mexico. Therefore, goods from FTA partners like the US, Canada, the EU, and Japan are not subject to these adjustments.

Harming the Interests of Relevant Trading Partners Including China

Yicai Global: The Ministry of Commerce spokesperson stated that once Mexico's unilateral tariff increase measure is implemented, even within the WTO framework, it would harm the interests of relevant trading partners, including China. How should this be interpreted?

Jian GUAN: Firstly, does Mexico's proposed measure violate WTO rules? Probably not. The WTO website shows Mexico's bound tariff rate simple average commitment under the WTO is 36.2%. Preliminary screening and comparison suggest that Mexico's proposed tariff increases for different products generally remain within its WTO bound tariff commitments. This approach, at least on the surface, does not violate Article 2.1(a) of GATT 1994 concerning bound tariffs. Simultaneously, the proposed tariff increases apply to products from all countries and regions without a free trade agreement with Mexico, so at least on the surface, it does not violate the Most-Favored-Nation principle in Article 1.1 of GATT 1994.

Secondly, how do Mexico's proposed measures negatively impact China's trade and investment? Its policy caters to the "America First" policy.

Currently, hindered by US tariff measures on China, many Chinese enterprises are investing in building factories in Mexico, or exporting upstream products to Mexico. After completing "substantial transformation" locally in Mexico, they reasonably utilize the preferential policies of the USMCA to export final products to the US. However, this development has sparked dissatisfaction in the US, which worries that China is circumventing tariffs via Mexico and weakening the competitiveness of US manufacturing. Besides demanding relevant countries strengthen efforts against "transshipment," the US has also been implicitly and explicitly pressuring Mexico to take measures against Chinese enterprises and products. Mexico's proposed measures this time clearly aim to cater to US demands. Earlier this year, there were reports suggesting Mexico proposed to the US the idea of building a "North American fortress" and raising tariffs on China in exchange for the US continuing to implement the USMCA.

China is Mexico's second-largest trading partner. Statistics show that in 2024, imports from China accounted for 20% of Mexico's total imports. According to Mexico's Ministry of Economy, these tariffs would affect imported goods worth $52 billion. Even extrapolating based on just that 20% proportion, this proposed measure would affect at least over $10 billion worth of goods from China. Considering this proposed measure does not apply to countries with trade agreements with Mexico and selectively applies only to certain goods, particularly sectors where China has strong comparative advantages, such as steel, automobiles, textiles, paper, ceramics, clothing, machinery, and electronics, products from China would likely be disproportionately and maximally affected. Why doesn't Mexico raise tariffs on other products, like agricultural products? Because China's exports in those areas are probably smaller.

"China Consistently Firmly Upholds the Multilateral Trading System with the WTO at Its Core"

Yicai Global: How should we view some current opinions questioning whether this measure is a unilateral measure?

Jian GUAN: China consistently firmly upholds the multilateral trading system with the WTO at its core. China says this, and acts accordingly. This can be glimpsed from China's recent statement that it will not seek new special and differential treatment in WTO negotiations.

At the same time, initiating investigations into other countries' measures or practices in trade, investment, or intellectual property fields is a common practice for the US and the EU. It is a domestic affair within the sovereign rights of WTO members and is not subject to restriction or limitation by WTO rules. What measures are taken after the investigation might be a point of contention.

However, if a country blindly caters to the "America First" policy, under the pretext of complying with WTO rules, to harm China's interests, then China cannot afford to treat it lightly. Although Mexico's proposed measures have not yet been formally implemented, China immediately launched a trade and investment barrier investigation, which fully demonstrates its stance.