The Tariff Cut 39.5 Per Cent of Autoparts Imports and 9.6 Per Cent of Plastics

On 1 January 2026 Mexico placed duties of 5% to 50% on 1,463 tariff fractions, applied to goods by origin rather than by product. Five months later, imports of autoparts from the countries the decree targets had fallen 39.5%. Imports of plastics from the same countries over the same months had fallen 9.6%.

Same decree. Same customs authority. The same 50% ceiling available on both lines. A 4.11x difference in response.

That gap is the most informative number in the Mexican chemical market, because it measures the one thing a tariff schedule cannot express: whether there is a factory on the other side of the border that can make the thing. Mexico has spent three decades building the capacity to mould a wiring harness under T-MEC. It has not built the capacity to make the resin the harness is moulded from, at the volume and the price the harness maker needs. So the same instrument can substitute for one import and only re-price the other — and the second is the one that matters for a market importing 78.26% of what it consumes.

What the decree actually is

The instrument is a decree modifying the tariff of the Ley de los Impuestos Generales de Importación y de Exportación, issued under the Executive’s extraordinary faculty in Article 131 of the Constitution. It puts 1,463 fractions under rates of 5% to 50% for goods originating in countries with which Mexico has no trade agreement — China above all, but also South Korea, India, Vietnam, Thailand, Indonesia, Taiwan, non-preferential trade with Brazil, Nicaragua, the UAE and South Africa. The legislative record puts the covered import flow at US$51,910m, 8.3% of everything Mexico imported in 2024.

The internal architecture matters more than the ceiling. Of the 1,463 fractions, 316 were left duty-free, 341 carry a 35% rate and 302 carry 10%. The 50% ceiling is concentrated on the highest-impact lines, light vehicles chief among them. Chemicals sit inside the package through plastics (79 fractions), paper and board (47), glass (25) and soaps, perfumes and cosmetics (24), and the Secretaría de Economía’s own sector breakdown names productos químicos among those affected. Its legal basis is the WTO-bound Nación Más Favorecida ceiling, which is what keeps the measure defensible in Geneva while it is contested in Beijing.

The semester that tested it

The first post-tariff half-year did not show a market losing supply. It showed one paying more for it. Chemical imports reached US$21,443.2m in January–June 2026 against US$19,017.9m a year earlier, up 12.75%; exports rose 7.79% to US$5,299.3m; the chemical trade deficit widened 14.48% to US$16,143.9m. Half a year of imports already equals 56.22% of the whole of 2025.

Domestic output went the other way. Cumulative chemical production to June 2026 was down 3.9% year on year and domestic sales down 1.3%; by July, accumulated production value stood at MXN 239,150.5m, 1.5% below 2025, with domestic sales 3.17% lower. Imports rose while national production fell.

And the decree did work on the flows it could reach. Imports of the 1,463 covered fractions from non-treaty countries fell 23.24% between January and May, from US$15,383m to US$11,808m. Chinese-origin imports of those lines fell 28.43%, from US$10,099m to US$7,228m. Taiwan-origin covered imports fell 32.7%, non-preferential Brazil 29.6%, South Korea 21.9%, India 12.3%, Thailand 6.3%.

So the instrument hit its target and missed its purpose. That is not a paradox. It is what a tariff does in a market whose constraint is upstream: the flow is re-routed, the requirement is unchanged, and the price of meeting it rises.

Why plastics held and autoparts did not

Light-vehicle imports from covered origins fell 29.7%, autoparts 39.5%, footwear 37.9% and trailers 54.5%. Plastics fell 9.6%, to US$1,503m. The tariff cut autopart imports 4.11 times harder than plastics imports.

The mechanism is requalification. A converter that switches resin supplier must requalify a specification with its own customer — a qualification cycle measured in months, with the customer’s product liability attached to the outcome. A converter that switches a moulded part can often buy from a plant twenty kilometres away, on a specification that already exists. The tariff changes the price of the input in one case and the identity of the supplier in the other, and only the second is a substitution.

This is also why the tariff transmits slowly into consumer prices and quickly into margins. ANIQ counts more than 40 productive branches served by the chemical chain — packaging and film converters, injection moulders for autoparts and appliances, paint and coatings formulators, detergent blenders, pharmaceutical and personal-care manufacturers — and the distribution tier that sits in front of them works on credit, lot size and technical support as much as price. The intermediate tier absorbs the landed-cost increase first. Resins and petrochemicals together are 46.82% of the import bill, and that is the tariff-sensitive core: bulk, specification-standard products that are substitutable in principle and largely not substitutable in practice, because the domestic assets that would make them are either underfed or idle.

The tariff reaches a fifth of the bill

The most under-reported fact about Mexico’s chemical import bill is that the decree does not touch most of it. In January–June 2025, 69.6% of chemical imports — US$13,231.6m — came from Mexico’s North American treaty partners, goods that keep preferential treatment as long as they satisfy origin requirements. The European Union supplied US$1,669.2m under its own agreement. Asia supplied US$3,564.5m, or 18.74% of the total, and that is the pool the decree can reach.

On the scale of the price channel: Asia-origin chemical imports ran at roughly US$7.15bn in 2025. An effective 25% duty across that entire base would add about US$1.79bn a year, equal to 3.67% of apparent consumption. That is an upper bound — 316 of the 1,463 fractions are exempt and not every chemical line carries the ceiling rate — but it is the right order of magnitude for what the regime ultimately costs Mexican industry. It is worth stating plainly that this is an upper bound on a cost, not a forecast of a benefit.

The ceiling is upstream, not at the border

Mexico consumed US$48.73bn of chemical products in 2025 — production of US$20.58bn, plus imports of US$38.14bn, minus exports of US$9.98bn. Imports covered 78.26% of consumption by value and 75.58% by volume, and the sector ran a US$28.16bn chemical trade deficit.

Behind that structure: petrochemical installed capacity fell 35.9% year on year in ANIQ’s June 2026 reading, around 30% of sector capacity sits idle, and utilisation stood at 62.61% in October 2025. In a market where more than three-quarters of consumption is imported, that combination is close to a definition of the problem. The domestic industry is not short of assets. It is short of the feedstock and the economics that would let the assets run.

The scale of the official response is real, and so is its arithmetic. Pemex’s recovery programme commits MXN 93bn between 2026 and 2030 to reach 849,000 tonnes a year of petrochemical output and more than 4 million tonnes of fertilisers. Against a 2025 import volume of 33,198 thousand tonnes, that petrochemical target is 2.56% of the imported base. Pemex is a price-setter by presence and a supply-shaper only at the margin; in the near term it is a demand signal for engineering, equipment and maintenance services rather than a source of new molecule.

The Etano-Etileno project is the one that could change the shape of the market. It commits MXN 30bn to rehabilitate five plants and their auxiliary services at the Cangrejera and Morelos complexes in Veracruz, targeting 520,000 tonnes a year of polyethylene, ethylene oxide and glycols. The Secretaría de Energía’s hydrocarbons plan projects ethylene derivatives available for sale from those two complexes rising from 176,000 tonnes in 2025 to 1.029 million tonnes from 2030 — a six-fold increase, and the single largest prospective change in Mexican chemical supply in a generation. It is also conditional on the works being executed and fed.

Outside Pemex, the most advanced private project is the Proman–Gas y Petroquímica de Occidente ammonia plant at Topolobampo, Sinaloa, with a first phase reported at US$1,631m for 800,000 tonnes a year and later methanol and urea stages announced at more than US$5,600m combined — still subject to dialogue tables on social and environmental conditions through 2026. Underneath all of it, CENAGAS’s public consultation on natural-gas transport and storage needs is the clearest available signal that even the midstream layer that would serve new chemical capacity is not yet settled.

Alpek shows where the margin is actually set

Alpek’s third-quarter 2026 results, published on 21 October, are the most useful public window on how a Mexican chemical producer earns. Volume reached 1,172 thousand tonnes, up 4% year on year — 967 kt of polyester, 205 kt of plastics and chemicals. Reported EBITDA was US$303m, up 161%; comparable EBITDA was US$276m, down 18% sequentially but up 101% on the prior year; the company raised 2026 comparable EBITDA guidance to US$990m and cut leverage to 1.8x from 2.2x.

Two details in that release matter more than the headline. First, the drivers it names are external reference prices, not Mexican demand: elevated Chinese PET reference margins of US$213 per tonne and higher ocean freight to South America of US$321 per tonne. A Mexican producer’s margins are set in Asia and on the water. A tariff on imported molecule does not change that; it adds a premium to the cost side of the same equation. Second, the company describes a deliberate local-for-local production strategy to serve regional markets — which is exactly the commercial response a tariff environment is designed to produce, from a producer whose own input costs the tariff also raises.

Three variables, and one that outranks the decree

Ethane and gas. Rehabilitating a cracker that cannot secure a continuous, competitively priced ethane slate produces nameplate capacity, not supply. This is the highest-severity risk in the market and the only one that decides the volume path decisively.

The T-MEC review. The review opened on 1 June 2026, and in April ANIQ, Canada’s CIAC and the American Chemistry Council jointly argued for preserving duty-free trade, deepening origin verification and regulatory convergence, and making full use of the Chemical Sectoral Annex — framing the ask as implementation and compliance rather than renegotiation. For a chemical producer the treaty is worth more than any tariff preference elsewhere, because it governs the 69.6% of the import bill that arrives from North America and the terms on which Mexican-made chemicals reach the United States. A tightening of origin verification without a workable annex would expose precisely that flank and raise the cost of the whole regime by an order of magnitude.

The fourth transitory article. When the Chamber of Deputies approved the package on 9 December 2025 it adopted three reservations, one of which modified quotas on eight fractions and another of which added a fourth transitory article. That article provides that, for the tariffs created by the reform, and with the objective of guaranteeing the supply of inputs in Mexico under competitive conditions, the Secretaría de Economía may implement specific legal mechanisms for importing goods from countries with which Mexico has no trade agreement in force. This is the valve through which a tariff designed to protect domestic production can be quietly reopened for the inputs domestic production cannot supply. Any company modelling 2027 chemical costs should be reading that clause, not the rate schedule.

The number that should worry you

Pheonix models three paths to 2033. In the substitution case (3.40% CAGR, US$63.68bn) the Cangrejera and Morelos restarts, Topolobampo ammonia and the fertiliser rehabilitations land close to schedule, import dependence falls, the tariff premium erodes and prices normalise. In the base case (4.86%, US$71.24bn) the current mix persists — volume growth of 2.28% to 52,609 thousand tonnes, with revenue per tonne rising from US$1,109 to US$1,354 as the tariff premium embeds itself in landed cost. In the import-dependence case (6.20%, US$78.85bn) the announced projects slip, near-shoring demand keeps arriving, and the import bill keeps compounding.

The higher nominal number is the worse outcome for the country. That is the counter-intuitive core of this market: value growth and industrial development point in opposite directions, because a market can grow by buying more molecule from abroad at a tariff-inflated price while its own plants stay underfed.

One further caution on the base year. Apparent consumption in 2025 was 11.81% below the 2023 figure of US$55,259m, yet volume over those two years was essentially flat — 44,432 thousand tonnes in 2023 against 43,927 in 2025. The decline was a price event, not a demand event. The 2025 base therefore sits near a price trough for bulk petrochemicals, not near a demand peak, which means the price component of the forecast is a normalisation as much as a premium.

What would change the answer

Three developments would materially improve the volume path, and only one of them is a trade instrument. A contracted, priced ethane and gas supply for the Cangrejera and Morelos units — the first improves the outlook decisively; the other two improve it at the margin. A T-MEC outcome that preserves duty-free treatment and clarifies origin verification for chemical transformations. And a tariff administration willing to use the fourth transitory article where no domestic substitute exists — which, on the evidence of the first half of 2026, is most of the resin and petrochemical import bill.

Absent those, the honest reading of the 50% ceiling is that it is a route instrument and a price instrument. It has not been a supply instrument this decade: Mexico will still be importing roughly three-quarters of its chemicals in 2033, from North America at treaty rates and from Asia at whatever the transitory article and the review allow. The rate is not the variable to watch. The variable to watch is whether a cracker in Veracruz gets a gas contract.

The underlying analysis, sizing and three-case forecast are in the Mexico chemicals market report, with the summary findings in the accompanying release. The reference prices against which any Mexican substitution has to compete are set in the global olefins, global ethylene and global polypropylene markets; the parallel import chains run through methanol and, for fertilisers and crop protection, the phosphate rock and glyphosate and organophosphate intermediates markets. The downstream channels that carry the cost into consumer prices run through surfactants and citric acid.