Amid current conversations regarding tariffs and regulation, it is easy to forget that there will always be some winners in these situations; MercadoLibre has been dubbed as one of them. MercadoLibre, often called the ‘Amazon of Latin America’, has recorded stellar growth in 2024 – the e-commerce giant’s full year profit jumped to US$1.9bn, whilst revenue grew 38% y-o-y to US$21bn. In Q4 2024, commerce revenue grew across the company’s three core markets: Mexico, Brazil and Argentina.
Now, the company is set to benefit from new Mexico import tariffs. The Mexican government has been steadily announcing tariff changes in order to cut down on Asian e-commerce imports and reduce international competition for domestic companies. For example, the Sheinbaum administration recently imposed a 19% tax on goods imported via courier services — a move that will likely significantly impact Chinese e-commerce competitors such as Temu and Shein.
According to Itau BBA, MercadoLibre brings in some 15% of its goods sold in Mexico from abroad, largely from China. While the tariffs will impact MercadoLibre’s goods sourced from China, the overall effect of reduced competition is expected to be positive.
These benefits have not been lost on MercadoLibre. This week, the company announced plans to expand its Mexican operations with an investment of $3.4bn. The investment signals a 38% increase in last year’s investment, and is primarily focused on enhancing the company’s logistics infrastructure, as well as improving the company’s digital payment services.
Despite current global uncertainty, it seems that Mexico remains an attractive logistics hub for companies like MercadoLibre. The country has offered investment incentives as part of its “Plan Mexico” strategy, whilst the developing e-commerce market has boomed in recent years in the Latam region due to rising internet penetration and fintech adoption. Furthermore, Mexico’s strategic location, expanding logistics infrastructure, cost-effective operations, and trade agreements make it an attractive logistics hub for companies like MercadoLibre. Mexico is now MercadoLibre’s second largest market after Brazil, according to the company’s financials.
However, competition in the country is also fierce. Although the company has limited e-commerce operations in the Latam region, Amazon is present in the fast-growing Mexican market. Competition between the two has been driving real estate investment, particularly in Mexico City.
While Mexico’s new import tariffs present challenges, they also offer opportunities for established players like MercadoLibre and Amazon to strengthen their market positions. The evolving landscape will test the adaptability of smaller competitors and Asian sellers as they navigate these regulatory changes.
Author: Nia Hudson
Source: Ti Insight
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