BRUSSELS — Europe and Brazil are moving to deepen trade ties as the European Union’s new agreement with the Mercosur bloc takes effect provisionally and Brazil faces possible new tariff pressure from the United States, reshaping trade calculations for the world’s major economies.
The EU-Mercosur Interim Trade Agreement, covering Brazil, Argentina, Paraguay and Uruguay, began provisional application on May 1, 2026, reducing or eliminating tariffs on a range of goods and creating new market access between the two regions. The European Commission said the agreement is intended to expand trade in industrial goods, services and agricultural products while lowering long-standing trade barriers.
The agreement comes as Washington increases scrutiny of Brazilian trade practices. The U.S. Trade Representative said in June that an investigation under Section 301 of the Trade Act had found certain Brazilian policies involving digital trade, tariffs, intellectual property, ethanol access and other areas to be “unreasonable” and proposed possible responses.
Brazilian officials have opposed the prospect of higher U.S. tariffs, while business groups have warned that additional trade barriers could affect exporters in sectors including agriculture and manufacturing. A proposed U.S. tariff measure on Brazilian goods has become part of a broader debate over market access and trade relations between the two countries.
European and Brazilian officials have highlighted the Mercosur agreement as a way to strengthen commercial links at a time when global trade policy is facing greater uncertainty. The deal connects the EU market of 27 countries with the Mercosur bloc and is expected to cover a combined market of more than 700 million people once fully implemented.
The agreement has also faced criticism in Europe, particularly from some agricultural groups concerned about competition from South American producers and environmental standards. European institutions have said the pact includes safeguards and rules covering sustainable development, food standards and fair competition.
For Brazil, the EU is a major trading partner, with exports ranging from agricultural commodities to minerals and industrial goods, while European companies seek improved access to South American markets for machinery, chemicals and other products. The EU has said the agreement will gradually reduce tariffs on sectors including automobiles, pharmaceuticals and other industrial goods.
The EU-Mercosur trade framework remains subject to further legal and political steps before full entry into force. The interim agreement will continue to apply while the broader partnership agreement moves through the remaining ratification process.
