The 2026 Tariff Landscape: What Actually Changed

If you're relying on tariff information from even three months ago, you're likely working with outdated numbers. Three distinct regimes now operate simultaneously, each with different triggers, exemptions, and implications depending on where goods originate, where they're processed, and where they're ultimately sold.

What tariff applies to Mexican imports entering the United States?

This changed on February 20, 2026, when the U.S. Supreme Court ruled in Learning Resources v. Trump that the use of the International Emergency Economic Powers Act to impose broad import tariffs exceeded presidential authority. The 25% IEEPA tariff that had applied to Mexican imports since March 4, 2025 was struck down.

The administration responded by invoking Section 122 of the Trade Act of 1974, imposing a 10% surcharge on imports from Mexico (and Canada) effective February 24, 2026. The administration announced an increase to 15% (the statutory maximum), but as of March 2026, no formal proclamation has been issued. Section 122 has a statutory limit: the tariff expires after 150 days unless Congress acts, placing the expiration date at approximately July 24, 2026.

The critical continuity for manufacturers: USMCA-qualifying goods remain exempt under Section 122, just as they were under IEEPA. Products that meet USMCA rules of origin enter the United States duty-free or at normal MFN rates. Non-qualifying goods in covered product categories now face a 10% surcharge rather than the previous 25%, with a potential increase to 15% pending. The proclamation excludes goods already subject to Section 232 duties, approximately 1,100 HTS codes listed in Annex II (covering pharmaceuticals, certain electronics, aerospace products, critical minerals, and energy products), and other specified categories.

The IEEPA period is not completely behind us. On March 4, 2026, the Court of International Trade ordered CBP to refund all IEEPA duties collected between March 4, 2025 and February 24, 2026. CBP disclosed it collected approximately $166 billion in IEEPA tariffs from roughly 330,000 importers across 53 million entries. CBP is building a new automated refund system called CAPE (Consolidated Administration and Processing of Entries), a dedicated module within the existing ACE platform. As of the March 19 status hearing, the CAPE claim portal is 73% complete and mass processing is 45% complete. No firm refund start date has been committed. The court suspended its immediate-compliance directive to give CBP time to build the system, with the next status hearing scheduled for March 31, 2026. CAPE will not initially cover certain entry types, including those subject to antidumping or countervailing duty proceedings. For manufacturers who paid significant IEEPA duties over the past year, this refund represents a potential cash recovery, but the timeline remains uncertain.

What about Mexico's own tariff changes?

Mexico's December 29, 2025 decree, published in the Diario Oficial de la Federación, expanded import duties on 1,463 tariff lines covering automotive parts, textiles, steel, aluminum, plastics, electronics, furniture, footwear, glass, and toys. Tariff rates range from 10% to 50% ad valorem. These duties apply exclusively to imports from countries with which Mexico does not maintain a free trade agreement, primarily China, India, South Korea, Thailand, and Turkey. Imports from the United States and Canada under USMCA are unaffected.

And the tariff structure on Chinese goods?

Through layered Section 301 tariffs, Section 232 duties, and the Section 122 global baseline tariff, the effective tariff rate on Chinese goods reached 33.9% by the end of 2025, according to the Penn Wharton Budget Model. That figure was calculated before the Supreme Court's February 2026 ruling replaced IEEPA tariffs with Section 122, though the Treasury Department has stated that the combination of Section 122, Section 301, and Section 232 results in "virtually unchanged" tariff revenue for 2026. Product-specific rates run significantly higher: lithium-ion batteries at 25%, steel and aluminum products above 50%, and some categories that spiked to announced rates of 145% during the April 2025 tariff escalation before being partially rolled back.

Section 232 country exemptions for steel and aluminum were eliminated in March 2025, setting the rate at 25% globally. In June 2025, Section 232 duties were raised to 50% for all countries, including Mexico. These duties are NOT exempt under USMCA. This matters for manufacturers whose bills of material include significant steel or aluminum content sourced from outside the USMCA region.

These three regimes interact. A manufacturer importing Chinese-origin components into Mexico for assembly, then exporting finished goods to the United States, faces potential duties at two borders. Understanding which exemptions apply at each crossing point is where the financial analysis gets specific.

How Much U.S.-Mexico Trade Actually Enters Duty-Free

Here's the headline number: approximately 88% of U.S. imports from Mexico entered duty-free in 2024, according to U.S. Census Bureau trade data. The blended effective tariff rate across all U.S. imports from Mexico that year was approximately 0.2-0.3%, reflecting the fact that USMCA-qualifying goods (the vast majority) enter at 0% while a small share paid standard MFN duties.

What does that 88% mean in dollar terms?

Total U.S.-Mexico bilateral trade reached $839.9 billion in 2024, with $505.9 billion flowing from Mexico into the United States. At an 88% duty-free rate, roughly $445 billion in goods crossed the border without triggering import duties. In 2025, bilateral trade climbed further to $872.8 billion.

Has the duty-free share changed since the tariff disruptions?

Significantly. The most consequential shift has been in USMCA utilization rates. Before the IEEPA tariff was imposed in March 2025, USMCA utilization sat at approximately 44.8% of eligible trade. When a 25% surcharge suddenly applied to every non-qualifying product, manufacturers had an urgent financial incentive to do the compliance work.

By November 2025, USMCA utilization had climbed to approximately 85%, according to U.S. Census Bureau trade data. That's a near-doubling in less than 12 months.

We see the same pattern across manufacturing operations in Mexico. The 85% USMCA qualification rate among current export-oriented manufacturers reflects this shift: companies that invested in understanding their rules of origin and adjusting sourcing where necessary now hold a durable cost advantage.

What about the remaining goods that don't qualify?

For the products that still don't meet USMCA rules of origin, the tariff picture has actually improved since the Supreme Court ruling. Under IEEPA, the surcharge was 25%. Under Section 122, it's 10% (with a pending increase to 15%). And if Section 122 expires in July 2026 without congressional renewal, the surcharge drops to zero, leaving only standard MFN rates averaging 3–4%.

On a $10 million annual import stream, the difference between qualifying for USMCA and not qualifying is now approximately $1 million per year under Section 122, down from $2.5 million under IEEPA. That's still material for manufacturers operating on 8–15% margins, but the penalty for non-qualification is lower than it was six months ago.

The USMCA Exemption: Why Utilization Rates Nearly Doubled in 12 Months

Before March 2025, USMCA qualification was a nice-to-have. A qualifying certificate of origin reduced duties, but the savings were modest enough that many manufacturers didn't prioritize the compliance work. The IEEPA surcharge changed that math overnight, and even though IEEPA has been replaced, the behavior change it triggered appears permanent.

How does USMCA qualification work?

USMCA Article 4.2 establishes several pathways for a product to qualify as originating: the good is wholly obtained in North America, produced entirely from originating materials, or produced using non-originating materials that satisfy the applicable product-specific rule in Annex 4-B. Those product-specific rules vary by tariff classification. Some require a change in tariff classification (tariff shift). Others require a minimum Regional Value Content (RVC), calculated using either the Transaction Value method (typically 60% for non-automotive goods) or the Net Cost method (typically 50%). Many products can qualify through either pathway. The key point for manufacturers: qualification is product-specific, not one-size-fits-all, and often depends on how the bill of materials is structured.

Products that meet these thresholds and satisfy any applicable Product-Specific Rules of Origin qualify for duty-free entry into the United States. Products that don't meet the thresholds enter at MFN rates plus the current 10% Section 122 surcharge (through approximately July 24, 2026).

What makes the automotive rules different?

The automotive sector has the most demanding rules of origin under USMCA. Passenger vehicles and light trucks must achieve 75% regional value content under the net cost method (up from 62.5% under NAFTA). Core automotive parts like engines, transmissions, and body/chassis components have their own RVC thresholds. At least 70% of a vehicle's steel and aluminum content must originate in North America. These rules are the most likely to draw scrutiny during the upcoming USMCA review.

Why does qualification matter even after the IEEPA ruling?

Three reasons. First, the Section 122 surcharge of 10% still applies to non-qualifying goods (with a potential increase to 15%). Second, there is no guarantee that Section 122 won't be renewed or replaced by another tariff mechanism. The political appetite for tariffs on Mexican imports hasn't disappeared, even if the legal authority has shifted. In fact, USTR launched two new Section 301 investigations on March 11–12, targeting 16 economies (including Mexico) on excess manufacturing capacity and 60 economies (including Mexico) on forced labor enforcement. Section 301 is the same authority behind the China tariffs that have been in effect since 2018, and USTR intends to be prepared to impose new tariffs by approximately July 24 — the same date Section 122 expires. Third, the USMCA review process is already underway. On March 18, 2026, USTR Jamieson Greer and Mexico's Secretary of Economy Marcelo Ebrard met in Washington to formally launch bilateral USMCA review discussions. The agenda focused on increasing U.S. and Mexican production, limiting non-market inputs into North American supply chains, and identifying gaps in key supply chains. The formal Article 34.7 review date is July 1, 2026.

The review is not an up-or-down vote on USMCA's survival. Under Article 34.7, each party confirms in writing whether it supports extending the agreement for another 16-year term. If all three confirm, the term extends through 2052. If any party declines to confirm extension, the agreement does not terminate. Instead, annual joint reviews begin for the remainder of the current term, which runs through July 1, 2036. Separately, Article 34.6 allows any party to withdraw with six months' notice at any time, independent of the review process. The most likely near-term outcomes are continuation with negotiated adjustments to specific provisions (particularly automotive rules of origin and digital trade) or continuation without changes while annual reviews proceed. Manufacturers who are already well above qualification thresholds are positioned favorably regardless of which outcome materializes.

Mexico's Own Tariff Reform: What Changed on January 1, 2026

Mexico's December 29, 2025 decree represents the most significant expansion of Mexico's import tariff schedule in recent memory.

What did Mexico change?

Mexico imposed new or increased tariffs on 1,463 tariff lines, with rates ranging from 10% to 50% ad valorem. The affected sectors include automotive parts, textiles, steel, aluminum, plastics, electronics, furniture, footwear, paper, glass, and toys. The tariffs are valid through December 31, 2026, though they may be extended.

Who do these tariffs affect?

The tariffs apply exclusively to imports from countries with which Mexico does not have a free trade agreement. The primary targets are China, India, South Korea, Thailand, Indonesia, Turkey, and Russia. Imports from the United States and Canada under USMCA are completely unaffected.

This distinction matters for manufacturers operating in Mexico. A company importing raw materials from the U.S. for processing in Mexico faces zero additional duties under these reforms. A company importing the same materials from China now faces 10–50% duties on top of any existing MFN rates, unless it operates under IMMEX and exports the finished product.

What is Mexico's broader tariff profile?

Mexico's simple average MFN tariff rate is 8.4%, with a trade-weighted average of 5.5%, according to the World Trade Organization's tariff profile for Mexico. Approximately 47.6% of Mexico's tariff lines are already duty-free. But those averages obscure the targeted increases that the January 2026 reform introduced for specific product categories from specific origin countries.

What does this mean for sourcing decisions?

For manufacturers planning Mexico operations, the sourcing implications are direct. Components and raw materials sourced from the United States, Canada, or any of Mexico's 14 free trade agreement partners covering over 50 countries enter Mexico at preferential rates. Components sourced from non-FTA countries, particularly China, now carry a materially higher cost unless the operation qualifies for IMMEX temporary import provisions. This makes the bill-of-material analysis, specifically the origin of every input component, a critical step in the financial modeling for any Mexico manufacturing decision.

IMMEX and IVA Certification: What Manufacturers Actually Need to Import Duty-Free

While USMCA governs what happens when goods cross from Mexico into the United States, the IMMEX program governs what happens when goods cross into Mexico for manufacturing. But IMMEX alone doesn't cover the full picture, and confusing what IMMEX does and doesn't exempt is one of the most common errors in tariff planning.

What does IMMEX actually cover?

IMMEX (Industria Manufacturera, Maquiladora y de Servicios de Exportación) allows manufacturers operating in Mexico to temporarily import raw materials, components, machinery, and equipment without paying Mexico's import duties, known as the Impuesto General de Importación (IGI). The imported goods must be used in manufacturing, transformation, or repair of products that are subsequently exported. As long as the goods are exported within the specified timeframe, no Mexican import duties are owed.

The program currently covers 5,821 active IMMEX programs and more than 3 million workers across Mexico, making it the backbone of the country's export-oriented manufacturing sector.

Does IMMEX also exempt the IVA (value-added tax)?

No. And this is where most tariff planning goes wrong.

To obtain the IVA exemption on temporary imports, a manufacturer must separately obtain the "Certificación en Materia de IVA e IEPS" from Mexico's tax authority, the SAT (Servicio de Administración Tributaria). This certification is a distinct application process with its own compliance requirements, including maintaining specific record-keeping systems, meeting financial solvency criteria, and allowing SAT audit access.

Most established IMMEX manufacturers hold both authorizations, but companies new to Mexico operations need to plan for this as a two-step process, not a single registration.

What are the current IMMEX exclusions and limitations?

How does IMMEX interact with USMCA?

When all inputs originate from USMCA countries, the two frameworks combine to eliminate duties at both borders. A manufacturer imports U.S.- or Canadian-origin components into Mexico duty-free under IMMEX (with IVA certification), manufactures finished goods, and exports them to the United States duty-free under USMCA. No duties at either crossing.

When inputs include components from non-FTA countries, the math changes. USMCA Article 2.5, the "lesser of the two duties" rule, limits how much duty Mexico can waive on non-originating inputs when the finished product is exported under USMCA preferential treatment.

This rule is why Mexico's January 2026 tariff increases matter even for IMMEX manufacturers exporting under USMCA. Higher baseline IGI rates on non-FTA inputs mean a larger Article 2.5 clawback, unless PROSEC or Eighth Rule programs reduce the applicable rate. For manufacturers with significant non-FTA content in their bills of material, the Article 2.5 calculation is one of the most important variables in the financial model.

The exceptions on the U.S. side: steel and aluminum content subject to Section 232 carries 50% duties regardless of USMCA status, and must be modeled separately from the USMCA and Article 2.5 analysis.

The China Comparison: What the Tariff Differential Actually Means

For manufacturers producing in China or sourcing heavily from Chinese suppliers, the tariff gap between China and Mexico has become one of the single biggest financial variables in any supply chain decision.

What are manufacturers actually paying on Chinese imports?

The effective tariff rate on Chinese goods entering the United States reached 33.9% by December 2025. That's nearly seven times the pre-trade-war average of approximately 3%. For specific product categories, the rates run considerably higher. Steel and aluminum products face Section 232 duties of 50%. Lithium-ion batteries for non-EV applications carry 25% duties. Certain semiconductor and technology inputs face rates that compound across multiple tariff categories.

What does the differential mean in practice?

The gap between the China scenario and the USMCA-qualified Mexico scenario is $6.68 million annually on a $20 million import stream. That number justifies a manufacturing location decision on tariff economics alone, before factoring in logistics savings, lead time reduction, or labor cost advantages.

Even without USMCA qualification, Mexico at 10% saves over $4.6 million compared to China at 33.9%. And if Section 122 expires, the non-qualified Mexico rate drops below China's by more than $5.8 million.

Where does China still win?

Mexico doesn't win every category. For certain commodities where China has massive scale advantages, especially products with low per-unit value and high shipping tolerance, the tariff differential alone may not overcome China's manufacturing cost advantage. Certain consumer electronics, low-end plastics, and basic textile inputs still flow through China because the production cost difference exceeds the tariff penalty.

The categories shifting fastest to Mexico are those where tariff exposure is high, lead times matter, IP sensitivity is real, and the product complexity justifies the proximity advantage: automotive components, medical devices, aerospace parts, industrial equipment, and mid-to-high-value consumer goods.

How to Run a Customs and Tariff Analysis

The aggregate data is compelling, but tariff economics are product-specific, supply-chain-specific, and sourcing-specific. The only way to know whether Mexico's tariff position creates a financial advantage for your operation is to model it.

What does a customs analysis involve?

A thorough customs analysis starts with the bill of materials. Every component that goes into the finished product needs to be classified by HTS code, country of origin, and current duty treatment. From there, the analysis maps each component against three scenarios: the current tariff exposure (wherever the product is manufactured today), the tariff exposure if production moves to Mexico under IMMEX, and the tariff exposure if the finished product qualifies for USMCA when exported to the United States.

The analysis also needs to account for several factors that generic tariff calculators miss: USMCA Article 2.5 claws back IMMEX duty exemptions on non-FTA inputs when finished goods are exported under USMCA, with the clawback amount driven by Mexico's IGI rate (now 10–50% higher for many categories under the January 2026 reform). PROSEC and Eighth Rule registrations can reduce these rates to 0–5%. Section 232 duties on steel and aluminum (50%) apply regardless of USMCA status. And IVA certification status affects cash flow, since without the Certificación IVA/IEPS, the 16% IVA on temporarily imported goods creates a working capital drag even if the IVA is eventually recoverable.

How do you determine whether a product qualifies under USMCA?

USMCA qualification is not a binary yes-or-no for most products. It depends on the Regional Value Content calculation, which in turn depends on the value and origin of every input component. A product that doesn't qualify today may qualify with relatively minor adjustments to sourcing. Shifting one or two high-value components from a non-regional supplier to a U.S., Mexican, or Canadian supplier can push the Regional Value Content above the qualifying threshold.

The two calculation methods, Transaction Value and Net Cost, can produce different results. Some manufacturers find that they qualify under one method but not the other. Running both calculations is standard practice for any serious qualification assessment.

What is a tipping point analysis?

Beyond the static tariff picture, manufacturers also need to understand how policy scenarios could change the economics. A tipping point analysis models the sensitivity of the Mexico manufacturing decision to different variables: What happens if Section 122 expires and no replacement tariff is imposed? What if Congress enacts a new tariff mechanism at a different rate? What if Section 301 tariffs on China are partially rolled back? What if Mexico extends its January 2026 tariff reform? What if the USMCA joint review tightens rules of origin?

Each scenario shifts the advantage in a different direction. The point of the analysis isn't to predict which scenario will occur. It's to understand at what point the Mexico decision becomes clearly advantageous, clearly disadvantageous, or dependent on qualification status.

What specific information should a manufacturer bring to this analysis?

To run a meaningful customs and tariff analysis, a manufacturer needs: bill of materials detail (HTS classification, country of origin, unit cost, annual volume for each component), current duty exposure (what you're paying today on your existing supply chain), finished product classification (the HTS code as it would be classified entering the U.S. from Mexico), sourcing flexibility (which components have alternative suppliers in USMCA countries), production volume and value (annual units, unit cost, and total import value to produce dollar-denominated savings), and steel/aluminum content detail (origin and value given the Section 232 exposure).

This is the kind of analysis that Tetakawi's trade compliance and customs team supports as part of a broader evaluation of whether Mexico manufacturing makes financial sense for a specific company and product. The customs analysis sits alongside the labor cost modeling, site selection evaluation, and operational readiness assessment that together form the basis for a go/no-go decision.

Geopolitical Tipping Points: Scenarios That Change the Calculus

Tariff rates are policy instruments, and policy changes. The past 12 months alone have seen a 25% IEEPA tariff imposed, a Supreme Court ruling that struck it down, and a 10% Section 122 tariff put in its place. Manufacturers making multi-year capital allocation decisions need to plan for volatility, not stability.

Scenario 1: Section 122 expires in July 2026 with no replacement

If Congress does not act to extend or replace the Section 122 tariff before its approximately July 24, 2026 expiration, the surcharge on non-USMCA goods from Mexico drops to zero. USMCA-qualifying goods see no change (they're already exempt). Non-qualifying goods revert to standard MFN rates, typically 3–4%. This is the most favorable scenario for Mexico manufacturing.

Scenario 2: Congress enacts a new tariff mechanism

Congress could pass legislation authorizing a new tariff on Mexican imports outside of the emergency-powers framework the Supreme Court invalidated. The rate, scope, and exemption structure would depend on the legislation. USMCA exemption would likely be preserved, but the rate for non-qualifying goods could be higher or lower than the current 10%.

Scenario 3: USMCA review tightens rules of origin

If the USMCA review results in tighter rules of origin, particularly in the automotive sector, some manufacturers may need to adjust sourcing to maintain qualification. Manufacturers already well above the qualification thresholds will be unaffected and may gain competitive advantage over competitors closer to the margin.

Scenario 4: U.S.-China trade deal reduces tariffs

If Section 301 tariffs are significantly reduced, the cost differential between China and Mexico narrows. However, even if Chinese tariffs dropped to 15%, USMCA-qualified Mexico at 0% would still maintain a substantial advantage. And the non-tariff factors, proximity, lead time, IP protection, supply chain resilience, remain unchanged.

Scenario 5: Mexico's tariff reform expands or extends

If Mexico extends its tariff increases beyond December 2026 or adds additional product categories, the sourcing implications for components from non-FTA countries become more permanent. Manufacturers who have already shifted supply chains to USMCA-region sourcing or who operate under IMMEX would be unaffected.

Scenario 6: IEEPA refund process delivers a one-time recovery

Manufacturers who paid the 25% IEEPA tariff between March 2025 and February 2026 are entitled to refunds under the March 4, 2026 CIT order. CBP is building a new automated refund system called CAPE (Consolidated Administration and Processing of Entries) within its existing ACE platform. As of March 19, the claim portal is 73% complete and mass processing is 45% complete. No firm refund timeline has been committed, and CAPE will not initially cover all entry types. For companies that paid significant IEEPA duties, the eventual refund represents a one-time cash recovery that can offset the cost of tariff compliance investments, USMCA qualification work, or Mexico market-entry planning. The next court status hearing is March 31, 2026.

What March 2026 Tells Us About What's Coming

The events of March 2026 are not isolated developments. Taken together, they reveal the shape of U.S. trade policy for the next phase and, critically, where Mexico stands in it.

Start with the Section 301 investigations. The timing is not coincidental. USTR initiated both investigations within three weeks of the Supreme Court striking down IEEPA tariffs, and the agency has stated publicly that it intends to complete the investigations by approximately July 24 — the exact date Section 122 expires. Section 301 is the most legally durable tariff authority available to the executive branch. It survived every legal challenge brought against the China tariffs since 2018. Baker Botts characterized it directly: Section 301 is the administration's Plan B to replace the tariff authority the Supreme Court took away.

For manufacturers in Mexico, two things matter about this. First, USMCA qualification remains the most reliable shield regardless of which tariff mechanism is in place. Section 301 tariffs, like IEEPA and Section 122 before them, would almost certainly preserve USMCA exemptions. Second, the investigations signal a sustained effort to restrict non-market (primarily Chinese) inputs across North American supply chains — which aligns directly with what Mexico and the U.S. agreed to prioritize in the USMCA review.

That alignment is the second signal worth watching. The March 18 Greer-Ebrard meeting produced an unusually specific joint agenda: increase bilateral production, limit non-market inputs, close supply chain gaps. Mexico arrived with a modernization agenda rather than a defensive posture. Ebrard has described Mexico's approach as pursuing the review "with firmness and composure." Separately, Mexico and Canada have been building their own bilateral coordination: more than 400 companies from both countries met in Mexico City in February 2026 to launch a joint action plan covering critical minerals, infrastructure, and supply chain security.

This is a meaningful shift. During the NAFTA renegotiation in 2017–2018, Mexico was largely reactive. In 2026, Mexico is co-authoring the agenda. The economic data supports the positioning: Mexico closed 2025 with $40.9 billion in foreign direct investment (10.8% year-over-year increase) and opened 2026 with $5.8 billion in announced investments in January and February alone, spanning energy, industrial parks, automotive, and advanced manufacturing. Transport equipment alone accounted for nearly half of all manufacturing FDI. Companies are not waiting for the review to conclude. They are acting on fundamentals.

The third signal is the legal environment. Twenty-four states have challenged Section 122 in federal court on grounds that could mirror the IEEPA outcome — arguing that Section 122 was designed for temporary balance-of-payments crises that cannot exist under modern floating exchange rates. The expedited briefing schedule (government response due April 3) means a decision could come before the tariff expires on its own. If Section 122 is struck down like IEEPA, it would represent the second time in four months that courts have constrained the executive's tariff authority, further narrowing the available tools to anything other than congressionally authorized mechanisms like Section 301.

What does this mean for decision-making?

Across most plausible scenarios, the direction favors Mexico over China for manufacturers serving the U.S. market. The structural advantage of operating within the USMCA framework, with duty-free import capability through IMMEX (plus IVA certification) and duty-free export through USMCA qualification, is durable across a wide range of policy outcomes.

The manufacturers most exposed are those who move production to Mexico but fail to achieve USMCA qualification, don't secure IMMEX authorization with IVA certification, or don't account for Article 2.5 clawback on non-FTA inputs. They face duty exposure on both sides of the border. The customs analysis, qualification assessment, and PROSEC eligibility review should happen before the manufacturing location decision, not after.

Frequently Asked Questions

Do manufacturers operating under IMMEX in Mexico pay import tariffs?

IMMEX exempts import duties (IGI) on raw materials, components, and equipment that are temporarily imported for export-oriented production. Mexico's January 2026 tariff increases on 1,463 product categories from non-FTA countries do not apply to IMMEX manufacturers importing those same products, as long as the finished goods are exported. However, there is an important limitation: when finished goods are exported under USMCA preferential treatment, USMCA Article 2.5 (the "lesser of the two duties" rule) claws back the IMMEX duty exemption on any non-originating inputs. PROSEC and Eighth Rule programs can reduce this exposure by lowering the applicable IGI rate to 0–5% on registered inputs. The IMMEX duty exemption also does not automatically include the 16% IVA. Manufacturers must separately obtain the Certificación en Materia de IVA e IEPS from SAT to receive the IVA exemption on temporary imports. Additionally, if an IMMEX company sells any portion of its production domestically rather than exporting it, duties become payable on the corresponding inputs, with strict compliance requirements and potential criminal liability for violations.

What changed with the Supreme Court IEEPA ruling in February 2026?

On February 20, 2026, the U.S. Supreme Court ruled in Learning Resources v. Trump that using IEEPA to impose broad import tariffs exceeded presidential authority. The 25% IEEPA tariff on Mexican imports was struck down. The administration replaced it with a 10% Section 122 tariff effective February 24, 2026 (an increase to the statutory maximum of 15% has been announced but not formalized; CBP is collecting at 10%), which expires after 150 days (approximately July 24, 2026) unless Congress acts. USMCA-qualifying goods remain exempt under Section 122. On March 4, the Court of International Trade ordered CBP to refund all IEEPA duties collected during the March 2025 to February 2026 period, approximately $166 billion from 330,000 importers. CBP is building the CAPE (Consolidated Administration and Processing of Entries) refund system, with the claim portal 73% complete as of March 19, 2026. No firm refund start date has been committed.

What happens if my product doesn't qualify for USMCA?

Products manufactured in Mexico that don't meet USMCA rules of origin may face the 10% Section 122 surcharge when entering the United States, depending on product category. The proclamation excludes goods already covered by Section 232 (steel, aluminum, automobiles) and approximately 1,100 HTS codes in sectors including pharmaceuticals, certain electronics, and aerospace. For covered goods, the surcharge applies on top of standard MFN duty rates. If Section 122 expires in July 2026, the surcharge drops to zero. However, there is no guarantee a replacement tariff won't be enacted. Non-qualification isn't necessarily permanent. Many products can be brought into compliance through targeted sourcing adjustments, shifting one or two high-value components to USMCA-region suppliers, or by using a different Regional Value Content calculation method. A detailed qualification assessment identifies exactly what changes would be required and what they would cost relative to the tariff savings.

How do Mexico's 2026 tariff increases affect U.S. companies manufacturing in Mexico?

For companies with USMCA-origin inputs, the effect is minimal. Imports from the United States into Mexico are covered by USMCA and are not subject to the new tariffs. For IMMEX manufacturers importing non-FTA components (from China, for example), the picture is more nuanced. IMMEX exempts import duties on temporary imports for export production, but when finished goods are exported under USMCA, Article 2.5 claws back that exemption on non-originating inputs based on Mexico's IGI rate. Since Mexico's IGI rates are now higher under the January 2026 reform, the Article 2.5 clawback is larger. PROSEC and Eighth Rule programs can reduce this exposure by lowering applicable rates to 0–5% on registered inputs. An additional exception: IMMEX eligibility for finished textiles and apparel was restricted in December 2024, and manufacturers in those categories now need specific authorization. The companies most affected by the reform are those importing finished goods from non-FTA countries into Mexico for domestic sale, without IMMEX status.

What is the effective tariff rate on Chinese goods entering the U.S.?

As of January 2026, the effective tariff rate on Chinese imports was 33.9%, according to the Penn Wharton Budget Model (updated March 16, 2026). The rate includes layered Section 301 tariffs (7.5–100% depending on product category), Section 232 duties on steel and aluminum (50%), and the Section 122 global baseline tariff (10%). For comparison, USMCA-qualifying goods from Mexico enter at 0% by definition, and the blended effective tariff rate across all Mexican imports was approximately 0.2–0.3% in 2024 before the tariff disruptions began. The differential exceeds 33 percentage points, making USMCA-qualified Mexico manufacturing one of the most tariff-efficient supply chain positions available. One important caveat: Section 232 duties on steel and aluminum at 50% apply to imports from Mexico as well and are not exempt under USMCA.

For comprehensive tariff analysis specific to your supply chain, and for guidance on USMCA qualification, IMMEX authorization, and PROSEC eligibility, see the USMCA 2026 Review guide. For industry-specific insights on tariff impacts, see the Appliance Manufacturing in Mexico guide.