Duties on Chinese imports to drop in December

Está en chino
Está en chino

Mexico’s long-running effort to defend its domestic manufacturing industries against cheap Chinese imports is about to take another hit.  The struggle goes back to China’s admission into the World Trade Organization (WTO) in 2001, which Mexico was highly reluctant to accept.    In return for Mexico’s vote to admit China, the two countries agreed to extend an existing Mexican program of compensatory import duties on key-sector products from the Asian giant.  Focusing largely on textiles, apparel and footwear, the duties ranged from over 100% to over 1,000% depending on the product.  The high tariffs helped stave off the inevitable for a while, but the extension was originally agreed to last only six years.  As the expiration date neared in 2007, the Mexican government heeded the frantic entreaties of the affected sectors, particularly the Guanajuato footwear industry centered around the city of León, and dived back into negotiations with the Chinese.  The result was elimination of the compensatory duties on 749 Harmonized Tariff System (HTS) product classifications, but the extension of the duties on some 200 remaining classifications.  The tariff rates on the remaining products have been reduced annually since 2008, but are still substantial, ranging approximately from 65% to 130%.

The jig, however, may now finally be up: The compensatory duty scheme is scheduled to expire on December 11, 2011, and Mexican Economy Minister Bruno Ferrari has declared that the duties will be lifted.  Guanajuato shoemakers are absolutely plotzing, but it’s important to remember that the end of the compensatory duty scheme does not mean that Chinese products will begin to enter Mexico duty-free.  The two countries have no trade liberalization agreement in place, and as such, upon expiration of the compensatory scheme Chinese products will become subject to Mexico’s General Importation and Exportation Tax program (TIGIE), which establishes the tariffs on products from countries with which Mexico has no special trade agreement.  Here’s a sample of selected product classifications and the difference between the soon-to-expire compensatory duties on Chinese-origin goods and the base duty according to the TIGIE scheme:

HTS code Product type 2011 Compensatory duty TIGIE duty
6402.20.01 Footwear

70%

30%

6402.99.01 Sandals

70%

30%

6106.10.01 Sports shirts

80%

30%

6204.62.01 Pants

80%

30%

8504.10.01 Lighting ballasts

129%

5%

8509.40.01 Food blenders

65%

20%

8509.40.02 Juicers

65%

0%

8516.31.01 Hair dryers

65%

15%

8712.00.02 Children’s bicycles

65%

15%

Source: Diario Oficial de la Federación, Secretaría de Economía

While the new duty rates will still be somewhat steep for some products (30% for footwear, shorts and pants), in other areas the change could mean a real difference for North American and European consumer goods brands manufacturing in China.  If the difference is enough to make products that were previously priced out of the market due to tariff suddenly price-competitive, we could see a surge in Chinese housewares products, for example, in Mexican stores next year.  As it is, recent growth in imports of Chinese-origin products in Mexico has been dramatic, posting an increase of 158% between 2005 and 2010, according to Mexico’s Economy Ministry.  Mexico has expanded its exports to China by an even more impressive 270% over the same period, but the total value of Chinese exports to Mexico is over 10 times that of Mexico’s shipments to China.  That ratio could become even more extreme if the new duties turn out to make the difference for enough foreign brands of consumer goods currently manufactured in China.

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19 thoughts on “Duties on Chinese imports to drop in December

  1. I can not wait for this! The Mexican footwear association has long complained about the entry of Chinese footwear, but they need to “up their game” so to speak instead of fighting it because it is going to happen. I hope this reduction of tariffs will be an impluse for Mexican companies to find creative ways to compete.

  2. David, your best bet is to have your Customs broker verify the import duty based on the Harmonized Tariff System classification of each of the products you wish to export to Mexico.

  3. hola podrian ayudarme!
    no se donde puedo encontrar las tarifas de arancelers que se aplicaran a partir de diciembre 2011 a los productos chinos, puede alguien darme la pagina.

  4. Hola Evelia, como referencia puedes checar la página del Sistema de Información Arancelaria Vía Internet: http://www.economia-snci.gob.mx:8080/siaviant/siaviMain.jsp , para más información hay varios enlaces en la página de la Secretaría de Economía en http://www.economia.gob.mx/index.php/comunidad-negocios-padre/sistema-de-informacion-de-la-se . En todo caso para verificar aranceles para alguna importación debes consultar con un agente aduanal o directamente con la Secretaría de Economía. Saludos.

  5. We have a customer who wishes to import glass bottles to be filled in Mexico and then export ot the USA will he have to pay import duties?

  6. John, your customer will need to determine the Harmonized Tariff System classification of the bottles and have their Customs agent verify the applicable duties. The changes to duties in December refer to the system of compensatory quotas on certain products; they do not mean that duties will be eliminated on all products.

  7. Is this definitely happening on December 11? Has there been any indication or opposition to this to risk delay? My company is going to be launching some product in Mexico, and this is a significant issue to us.. Is there any place i can get updated on these developments?

  8. I currently have a shipment ready to be shipped to Mexico. The contents are Binoculars, LED Torch and Calculators. Pleas eif you have information, could you inform me what was and is the Import Duty before and after Dec 11..
    Appreciate your help.

  9. Hi Joe, you need to work with your Customs broker to verify the Harmonized Tariff System classification of each of the products you seek to ship to Mexico, and once this is determined the Customs broker will verify the correct duties, if any, that apply. Good luck with your shipment!

  10. I need to find out duty component charged in Mexico on import of Aromatic chemical falls under Chapter 29 product. Is any website to find out the same? Is any difference of duty charged if imported from India or China?

  11. Help!~
    I am shipping 400 in a 40 ft container to Mexico. These bicycles are a gift to the kids of mexico. I need some direction as far a taxes are concerned. Import taxes, sales tax, duty taxes etc/
    Karen

  12. Kindly request please any inputs about the import duties of auto-parts going to Mexico from China

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