Mexico issues decree for 15-35% tax on 21 paper, packaging imports

The Mexican government’s decree, which updated and, in some cases, introduced new import tariffs ranging from 15% to 35% on 21 packaging and paper products, went into effect on Tuesday April 23.

According to the decree, the measure, which is valid for all countries, is set to last two years from April 23, therefore, until April 23, 2026.

Rafael Barisauskas, Fastmarkets’ senior economist for Latin America, initially viewed the decision as making the import of American products more advantageous compared with other countries, especially from China. 

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“Products are likely to become more attractive due to the United States-Mexico-Canada Agreement (USMCA), which requires higher regional integration, and due to lower logistical costs compared to imports from China, for example,” Barisauskas said.

The economist also noted that the US has available idle capacity, particularly in boxboard, to meet Mexican market demand.

“Having said that, the relevance that the United States lost was due to the cost of Chinese products, which, even with higher freight costs (due to the greater distance between China and Mexico versus Mexico and the USA), were competitive enough to replace the American product,” Barisauskas explained.

Barisauskas said he believes that the tariffs implemented by the Mexican government will “level the playing field,” making American products competitive again for Mexicans.

Some importers have said they will act to mitigate potential losses due to these measures, while others are still assessing possible actions to lessen the impact of the decision, Fastmarkets has learned.

Chinese market share in boxboard in Mexico grew from 3.9% in 2020 to 17.2% in 2023. Over the same comparative basis, the market share of American products in the same segment decreased from 62.2% in 2020 to 37% in January 2024.

Barisauskas highlighted, however, that there is an 85% economic correlation between Mexico and the US for packaging, in particular. He recalled that 80% of Mexican exports are destined for the US.

“Every 5% change in US GDP causes a 4% change in Mexican GDP,” Barisauskas said. Looking ahead, the economist assessed that North American exporters might raise their prices in anticipation of growing demand.

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