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Proposal aims to increase tariffs on 1,500 products by up

to 50%

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China criticizes proposal, warns of measures to protect

interests

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Adjusting tariff plan could hit Mexico's 2026 budget

By Diego Oré and Emily Green

MEXICO CITY, Oct 9 (Reuters) - Mexico's Congress will

hold off approving proposed tariff hikes on nearly 1,500

products from China and other Asian countries while Mexico holds

talks with those countries and considers changes to the

proposal, President Claudia Sheinbaum said on Thursday.

Sheinbaum sent the proposal - which seeks to increase tariffs by

up to 50% on cars, textiles, clothing, plastics, steel, and

other products - in early September to the lower house of

Congress, where her Morena Party holds a large majority. Many

analysts saw the move as an attempt to placate U.S. President

Donald Trump.

But since then, China - Mexico's second-biggest trading

partner after the U.S. - has criticized the proposal, saying it

would undermine investor confidence. China warned Mexico it

would take "necessary measures" to safeguard its "legitimate

rights and interests."

PROPOSAL UNDER REVIEW

On Thursday, Sheinbaum said her government was analyzing

potential changes to the tariff hikes.

"We are holding these meetings with different countries to

see if we can adapt what we are presenting to Congress for

approval this year," she said during her daily press conference.

Her comments came a day after Ricardo Monreal, leader of

Morena in the Chamber of Deputies, told reporters that Congress

would "pause" the proposal for now and pick it up again at the

end of November.

"We are reviewing the proposal very seriously," he said.

Morena legislators, who spoke on condition of anonymity,

told Reuters the tariffs would not be approved by Congress in

their current form and that the plan would likely have to be

softened. It was unclear what changes there might be.

Any adjustments could create holes in the government's 2026

budget, as Mexico's Finance Ministry projected the proposed

tariffs would generate $3.76 billion.

The proposed tariffs would affect imports from countries

Mexico does not have trade agreements with, including China,

South Korea, India, Indonesia, Russia, Thailand, and Turkey.

VEHICLE, AUTO PARTS TARIFFS COULD JUMP

As currently drafted, tariffs on light vehicles would rise

to 50% from 15%-20%, and on auto parts to 10%-50% from the

current zero-35%.

Some analysts estimate the increased tariff on cars would

primarily affect electric vehicles manufactured in China and

sold in Mexico, hitting BYD and Tesla the hardest.

The Sheinbaum administration argues the tariff increases are

a means of protecting Mexico's domestic production, although

they also come amid pressure from the U.S. for Mexico to curtail

business with China.

One Morena politician who spoke on condition of anonymity

said approval of the tariffs has been delayed amid concern that

they could boost consumer prices and harm Mexican businesses.

The person said that long-term, they believe Mexico is

moving toward a plan for the U.S., Canada, and Mexico to impose

matching tariffs on China.