Ecuador has officially imposed a 27% tariff on all products imported from Mexico, marking a significant escalation in trade tensions as President Daniel Noboa seeks to protect the nation’s local industry.
The announcement came on February 3, 2024, when Noboa declared, “Ecuador has always been open to commercial integration, but not when there is abuse. We will apply a 27% tariff on products we import until the free trade agreement is finalized.” This tariff is intended to support Ecuador's domestic producers and rectify the trade imbalance, which shows Ecuador importing significantly more from Mexico than it exports.
Over the past few years, the trade relationship between Ecuador and Mexico has faced numerous challenges. The two countries were close to finalizing a free trade agreement prior to the disruptions, but negotiations faltered due to disagreements over tariff exemptions on key Ecuadorian exports like shrimp and bananas.
Recent trade statistics reveal the gravity of the economic disparity between the nations. From January to November 2024, Ecuador imported nearly $551 million worth of goods from Mexico, including machinery and pharmaceuticals, compared to just $333 million exported. This resulted in a trade deficit of $218 million for Ecuador. Noboa's administration has stated the goal of addressing this imbalance through the new tariff.
Mexican exports to Ecuador are diverse, covering sectors such as medications, vehicles, and machinery. Notable products include medicines valued at around $66 million and light vehicles at about $40 million. Meanwhile, Ecuador is known for exporting cacao, fish products, and various agricultural goods, albeit at lower values when compared to imports.
The backdrop to these tariffs is the broader geopolitical climate, influenced by trade policies from the United States and tensions surrounding negotiations with the Mexican government. Just prior to Noboa's announcement, U.S. President Donald Trump had also moved to impose tariffs on imports from Mexico, signaling shifting dynamics across North American trade policies.
The relationship between Ecuador and Mexico deteriorated significantly last year after incidents involving political asylum, leading to elevated diplomatic strains and the eventual breaking of diplomatic ties following the controversial police raid at the Mexican embassy in Quito.
Noboa has repeatedly emphasized his intent to revitalize negotiations for a free trade agreement, stating, “We reaffirm our position to sign a free trade agreement with Mexico. Until that's achieved, we will implement the 27% tariff to promote our industry and provide fair treatment to our producers.” This stance aims to indicate both a commitment to trade negotiations and an assertive approach to protecting local interests.
Despite the current friction, both nations have previously shown inclination toward collaboration and integration within broader regional trade frameworks such as the Pacific Alliance, which includes several Latin American nations. The outcomes of this tariff imposition will likely play a pivotal role in shaping future diplomatic and economic relations between Ecuador and Mexico.
With the backdrop of upcoming elections slated for February 9, where Noboa aspires to secure re-election amid criticisms and challengers, the political stakes surrounding his economic policies are clearly heightened. Observers across the region will be closely monitoring how these tariffs affect not only bilateral trade but also the political ramifications within Ecuador.
While Mexico’s response to the new tariffs remains to be seen, the measure has certainly set the stage for renewed discussions over trade agreements and could lead to significant changes within the economic landscapes of both countries. Noboa’s administration must navigate these complex waters carefully to strike the right balance between local industry support and international trade partnerships.