Tariff proposal: A visitor sits inside a display vehicle at an auto show in Banten, Indonesia. A Mexican bill will raise or impose new duties starting next year on certain goods, including automobiles, auto parts, textiles, clothing, plastics and steel. — Reuters
JAKARTA: Trade Minister Budi Santoso says the government is working to secure a bilateral trade agreement to exempt Indonesia from Mexico’s planned tariffs.
The move follows reports that Mexico intends to impose duties of up to 50% on imports from several Asian countries, including Indonesia, starting in 2026.
“There has been no imposition of new tariffs yet, but we want Indonesia to be exempted once the tariffs are implemented,” Budi said on Monday after the International Eurasian Economic Union Free Trade Agreement Strategic Forum in Jakarta.
He said that negotiations on a bilateral trade pact with Mexico had been underway before the tariff proposal surfaced, and that his office was now pushing to expedite the process.
When asked what form an agreement may take, Budi indicated a preference to model it after the Indonesia-Peru Comprehensive Economic Partnership Agreement, which was concluded swiftly.
Such a deal, he noted, could include a specific clause guaranteeing tariff exemptions for Indonesian exports.
“Discussions are already underway,” the minister added. The issue has taken on new urgency since the Mexican Senate approved tariffs of up to 50% on imports from China and other Asian countries in 2026 to bolster local industries, Reuters reported last Friday.
The proposal, passed earlier by the lower house, will raise or impose new duties starting next year on certain goods, such as automobiles, auto parts, textiles, clothing, plastics and steel from countries that do not have trade deals with Mexico, including China, Indonesia, India, South Korea and Thailand.
The majority of products will face tariffs of up to 35%.
The Mexican Senate approved the bill with 76 votes in favour, five against and 35 abstentions, despite opposition from China and domestic business groups.
The approved bill is less stringent than an earlier version that stalled in the lower house, with about 1,400 tariff lines, mostly textiles, apparel, steel, auto parts, plastics and footwear.
The legislation reduced duties on roughly two-thirds of them compared with the original proposal.
Analysts and the private sector argued the move is aimed at appeasing the United States ahead of the next review of the US-Mexico-Canada (USMCA) trade agreement and said it is also intended to generate US$3.76bil in additional revenue next year as Mexico seeks to reduce its fiscal deficit.
“On the one hand, it protects certain local productive sectors that are at a disadvantage with respect to Chinese products. It also protects jobs,” said Mario Vazquez, a senator for the opposition PAN party.
Emmanuel Reyes, a senator from the ruling Morena party, defended the measure.
“These adjustments will boost Mexican products in global supply chains and protect jobs in key sectors,” said Reyes, who is also chairman of the Senate Economy Committee.
Looming over Mexico’s sweeping tariff proposal is next year’s USMCA review. Earlier this year, Mexico stepped up tariffs on Chinese goods in what analysts said was an effort to placate Washington.
But US officials continue to raise concerns. — The Jakarta Post/ANN
