Trade & Customs Oct 14, 2026 · 7 min read

Mexico zeroes its 10% duty on car-assembly kits

Mexico cuts car-kit duty to zero while finished cars from China pay 50%. Since 14 October, Mexico charges 0% instead of 10% on car-assembly parts under tariff line 9803.00.01, for five years. Only carmakers with a bonded-warehouse permit qualify, and the decree names kit assembly (SKD/CKD) projects. Most new cars from countries without a trade deal with Mexico, China included, have paid 50% since 1 January. Our view: this opens a cheaper route in for kits, not cars. Forwarders should expect more containerised kit cargo into Mexican bonded plants. Our call: at least one Asian carmaker announces a Mexican kit-assembly line by end of March 2027.

Mexico shut the door on finished cars. It just opened a window for kits.
From Wednesday 14 October 2026, Mexico charges zero duty, down from 10%, on parts imported to assemble cars. The cut covers tariff line 9803.00.01 and lasts five years. President Claudia Sheinbaum signed the decree on Friday 9 October. Finance Secretary Édgar Amador Zamora and Economy Secretary Marcelo Ebrard co-signed it. It appeared in the Diario Oficial, Mexico’s official gazette, on 13 October, according to The Rio Times.
Here is our view. This is the second half of a policy that started in January. Mexico made finished cars from outside its trade-deal partners very expensive. Now it is making it cheap to bring those cars in as kits and build them locally. For forwarders, that points to fewer finished cars on car-carrier ships and more containers of parts heading to bonded plants.

What the decree actually does

El Financiero reported the decree on 13 October. It changes the tariff schedule of Mexico’s general import and export duty law, known as the LIGIE. The line affected is 9803.00.01. Its official description is “Partes y componentes para el ensamble de automóviles”, meaning parts and components for car assembly.
The zero rate has conditions. According to El Financiero, it “aplicará siempre que se ajusten a los lineamientos que establezca la Secretaría de Economía”. In plain English, it applies only when imports follow guidelines set by the Economy Ministry.
It is also not open to every importer. Only companies with a bonded-warehouse permit for vehicle assembly and manufacturing under Mexico’s customs law can use it. A bonded warehouse (depósito fiscal) is a site under customs control. The decree names projects that set up in stages using SKD or CKD assembly. SKD means “semi knocked down”: the car arrives partly built, for example with the body already welded. CKD means “completely knocked down”: the car arrives in pieces and is built almost from scratch. Both are classic first steps for a carmaker testing a new market before it commits to a full factory.
The stated aim, per El Financiero, is to “reducir los costos de establecimiento y operación de nuevos proyectos automotrices”, that is, to cut the cost of setting up and running new car projects. The decree also refers to “el establecimiento gradual de operaciones productivas”, the gradual build-up of production. The Rio Times notes the government ties it to Plan México, its industrial strategy. The decree names no company, investment or job target.

The 50% wall it sits behind

The context is a tariff wall built last year. In December 2025, Mexico’s Senate approved duties on more than 1,400 products from countries without trade agreements with Mexico, Automotive World reported. China, India, South Korea, Thailand and Indonesia were among them. The vote was 76 in favour, 5 against and 35 abstentions. Chinese-made vehicles faced the steepest rate: 50%.
Before that, the rate on Chinese vehicles was 20%, Automotive Logistics reported in October 2025. The 50% rate took effect on 1 January 2026, according to The Rio Times.
The wall has worked, at least at the border. Chinese car imports fell 31.1% to 158,571 units in the first half of 2026, El Economista figures cited by The Rio Times show. In August, The Rio Times reported that imports of Chinese light vehicles fell about 43% by value in the first five months of the year.
Sales have not fallen the same way. Chinese brands took 17% of new light-vehicle sales in the first half of 2026, up from 14% a year earlier, The Rio Times reported in August. The paper said importers had shipped heavily before the deadline and were still working through that stock. That stock will run out. Brands that want to keep their share need another way to supply Mexico. Local assembly is the obvious one.
The decree does not name China. But the timing is clear to us. A 50% tariff on a finished car, next to zero on its kit for a bonded assembler, is a strong pull towards building in Mexico.

Why Mexico wants kits, not cars

Kit assembly brings jobs, supplier contracts and technology into the country. El Financiero says the decree also aims to encourage specialised hiring, cut operating costs and ease technology transfer.
There is a political side too. Mexico is in the middle of reviewing USMCA, its trade deal with the US and Canada. The Rio Times reports that the US Trade Representative said on 1 July that the US did not agree to renew the deal in its current form. Talks continue.
When the 50% tariffs passed, Oscar Ocampo of the Mexican Institute for Competitiveness told the Associated Press, as quoted by Automotive World: “The real reason has to do with the US [directly], it has to do with the review of the USMCA that is coming up.” In other words, the tariff wall was partly a signal to Washington.
The kit decree sends a messier signal. It invites investment that could come from the same Asian carmakers the wall was built against. Washington may not like that. The Rio Times says it is unknown how the US will view the measure, or whether paused Chinese investments will restart.

The rules-of-origin catch

Rules of origin decide where a product legally “comes from” for trade purposes. They matter here. Under USMCA, a car needs 75% regional content to count as North American, up from 62.5% under NAFTA, The Rio Times notes.
In our view, a car built in Mexico from a Chinese CKD kit is unlikely to come close to 75%. If so, it would not get duty-free entry to the US under the deal. Kit-built cars are therefore mainly a play for the Mexican market, not for export north.
Even that could change. Kenneth Smith Ramos, a former USMCA negotiator, told El Economista, as quoted by The Rio Times: “At this moment they have no guarantees of how the rules of origin will end up.” Any carmaker weighing a Mexican kit line has to price in that doubt.
There is history to the caution. BYD backed out of plans for local production in Mexico in 2025, Automotive World reported. The reported reason was concern that its technology could leak across the border. The Rio Times, citing El Economista, reports that several Chinese brands put plans for Mexican assembly plants on hold over the uncertain future of USMCA. The decree lowers the cost. It does not remove the politics.

What it means for forwarders

Our reading for freight is straightforward.
First, the mode shifts. Finished cars mostly move on ro-ro ships (roll-on/roll-off car carriers). Kits move in containers. If kit assembly grows, expect more container volume of auto parts into Mexican ports. Expect fewer finished units on car carriers from the same origins. Pacific ports such as Manzanillo are already busy. Automotive Logistics reported Manzanillo handled 346,249 TEU (twenty-foot equivalent units, the standard container measure) in August 2025, its highest month of the year to that point.
Second, customs work gets more specialised. Bonded warehouses for vehicle assembly run under strict customs control. Goods must be tracked in and out. Brokers and forwarders who know Mexico’s bonded regimes, and the Economy Ministry guidelines once they are clear, will be in demand. Those who don’t will find that getting it wrong means paying 10% on parts that could have come in free.
Third, inland moves change. Kits go to plants, not dealer lots. That means more drayage (short-haul trucking from port) and rail to assembly sites. It also means sequenced deliveries matched to production schedules.
Fourth, watch the guidelines. The decree leaves the detail to the Economy Ministry. Those rules will decide how wide this window really is. Shippers should not book volumes on the assumption of zero duty until their client’s permit and compliance are confirmed.
Fifth, keep an eye on Washington. If US negotiators treat kit assembly as a back door, the measure could become a bargaining chip in the USMCA review. That would put any new plant at risk.

Our prediction

We expect at least one Asian carmaker, most likely a Chinese brand, to announce an SKD or CKD assembly line in Mexico by the end of March 2027. We also expect US officials to raise the decree in the USMCA review before the end of the first quarter of 2027. Forwarders with Asia–Mexico auto-parts lanes should start talking to clients about bonded-warehouse flows now, not after the first announcement.

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