Since the beginning of Donald Trump's second term as President of the United States, the word "tariff" has taken center stage in the news. In February 2025, the U.S. government imposed tariffs on products from Canada, China and Mexico, and in April of the same year, universal tariffs were imposed on the rest of the world. Since then, some countries have reached agreements to reduce their tariffs, while others have faced additional increases. Mexico, however, continues to be one of the countries most affected by these impositions, which has had a considerable impact on the country's economy.
Taking into consideration the imposition of these tariffs in Mexico, it is crucial for entrepreneurs and business owners to know what tariffs are, where they are regulated and what impact they can have on your business. Although it is true that, in this context, they mainly affect companies exporting to the United States, tariffs can have a great impact on the entire national economy.
What are tariffs?
In simple terms, tariffs are those taxes that a country applies to goods coming from another country, which are usually calculated based on a percentage of the value of the product being imported. When the product enters the country, the importer is responsible for paying the duty tax. However, in practice, this cost may potentially be covered by the consumer. To avoid bearing the loss that the importers would incur from the tariffs, producers often raise the price of their products to compensate these additional taxes. This means that, in a way, the buyer ends up covering part, or all, of the cost of the tariff.
In most cases, tariffs are applied on specific goods. In Mexico, for example, we have the General Law of General Import and Export Taxes (Ley General de los Impuestos Generales de Importación y de Exportación in Spanish). This Law regulates the tariff quotas to be imposed on products that are imported or exported from the country, which traditionally vary among the categories of goods. For small and medium sized companies that import or export products of all kinds, it is important to know this Law and how it applies to your specific operations. Considering the taxes imposed on imports and exports will allow your business to have an effective business plan.
The impact of tariffs on Mexican businesses
The reality of the current tariff situation is that, although they can greatly affect larger exporters, small and medium-sized businesses in Mexico have also been made vulnerable by the imposition of tariffs, as they generate effects that transcend international trade and exports to the United States. The following are some examples of how small and medium sized companies in Mexico can be affected by the tariffs in their daily operations.
- Reduction of exports: As may become the case for various small and medium sized businesses that export, one of their main countries for the sale of their products is the United States, as the proximity allows smaller companies to sell in these countries through more accessible means. Although larger companies are more likely to absorb the additional costs of tariffs, it can be complicated for small and medium sized companies to maintain their production with higher costs. While it is true that they can raise their prices, one of the biggest factors that makes small and medium sized companies competitive is their affordable prices. Raising said prices can lead to the loss of customers and, therefore, a reduction in exports.
- Increased costs: In the case that tariffs begin to impact products imported into Mexico, there may be a high impact for small and medium sized businesses that rely on inputs or production materials that come from abroad. Due to the uncertainty of tariffs in the global economy, there may be negative impacts on the global supply chain, resulting in delays in the delivery of materials for small and medium sized companies.
- Potential opportunities: Regardless, there is a possibility that the imposition of these tariffs could have a positive effect for small and medium-sized companies. To give an example, there may be consumers who, because of the uncertainty in the global supply chain, have chosen to look for national or regional alternatives. This is where small and medium-sized companies, which traditionally have lower export capabilities, can enter the market to offer their products and services to a brand new "audience".
As we have seen, the tariff situation had, has and will have a great impact on international trade and the global economy. This is why it is essential for small and medium sized companies to be well informed about tariff regulations in Mexico to generate strategies and adapt to the current trade scenarios. Having the adequate legal counsel will be important, as it will allow for greater clarity when creating these strategies and adapting to a national and international market that is in a state of uncertainty.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
