Mexico’s new tariff policy: Which e-commerce platforms are most affected?

Mexico’s General Tax Administration issued a series of new tariff policies on January 1, the most noteworthy of which is the 17% to 19% tariff on small-value goods imported through express delivery companies, and this move may affect popular online retailers such as Shein and Temu.

The Mexican General Tax Administration stated that goods entering Mexico through express delivery companies from countries that have never signed international treaties with Mexico will be subject to a 19% tariff. According to the United States-Mexico-Canada Trade Agreement, goods worth $50 to $117 entering through Canadian and American express delivery companies will be subject to a 17% tariff, and goods worth more than $1 from other countries that have signed international treaties with Mexico will also be subject to a 19% tariff.

The policy targets countries that do not have international treaties with Mexico, and China is one of them. Domestic cross-border e-commerce companies Shein and Temu may be directly affected. Mexico said that the new policy is mainly to prevent the import of some tax evasion products, strengthen “combating abuses”, ensure a fair competitive environment for Mexican companies, and protect employment in the industry involved.

In fact, at the end of 2024, the Mexican government issued a series of new trade policies, deciding to impose a 35% import tariff on more than 100 imported textiles and a 16% value-added tax on cross-border e-commerce platforms. The implementation of these new policies will have a direct impact on the market competition environment of Chinese exporters and global e-commerce platforms in Mexico.

Mexico is one of the fastest growing e-commerce markets in the world. Because they are optimistic about the Mexican market, many cross-border e-commerce platforms have started to deploy here early. Amazon, Walmart and Meikeduo are the top three e-commerce platforms in Mexico, followed by AliExpress, Temu, Shein, Shopee, etc.

At present, Shein and Temu have considerable market share in Mexico. Since entering the Mexican market in 2018, Shein has quickly occupied the market share in the fashion field and has become one of the most popular brands in the local area. Temu has been online in Mexico since May 2023 and soon became one of the most downloaded shopping apps in Mexico. Through low-price subsidies, free delivery, free returns and other measures, Temu’s platform traffic has achieved exponential growth in 6 months. According to a report by securities firm Bursátil Mexicano, in April 2024, Temu had 15 million monthly active users in Mexico, while Shein had 10.1 million.

However, the impact of tariff policies on cross-border e-commerce is persistent and obvious. The United States plans to cancel the duty-free treatment for certain low-value goods in September 2023; the European Union is also preparing new measures for cross-border e-commerce platforms, including new taxes on e-commerce platform revenues and administrative processing fees for each item; from July 1, 2024, South Africa will impose a 45% import tax plus value-added tax on all imported clothing, and the tariff on low-value packages was previously 20%.

How to deal with the impact of relevant policies in the overseas destination? A Temu spokesperson once said that the platform’s competitive prices come from supply chain efficiency and operational expertise, rather than circumventing rules or exploiting tax loopholes. Shein has joined the “Section 321 Data Pilot Program” launched by the U.S. Customs and Border Protection. The company emphasized at the time that participating in this project is committed to improving operational transparency and meeting global trade compliance standards.