Mercosur-EU Agreement: Immediate Effects for Brazilian Agriculture

Starting May 1, 2026, trade rules from the Mercosur-European Union agreement will provisionally come into effect. This is part of a broader agreement between the blocs that is still undergoing ratification by member countries. On that date, some products scheduled for immediate tariff reduction will already begin to benefit from the effects of the tariff elimination.

In 2025, Brazil exported a total of approximately US$169 billion in agribusiness products, of which approximately US$24,7 billion (15%) went to the European Union. Of this amount, about 68% (US$16,9 billion) already entered the European market with zero tariffs, concentrating on products for which the bloc has a structural dependence on imports.

Brazilian agribusiness exports to the European Union, by administrative processing in billions of current dollars.

Brazilian agribusiness exports to the European Union, percentage share relative to dollar value by administrative treatment.

The remaining US$7,8 billion (32%) still faces some level of tariff protection in the European Union – and it is in this segment that the Mercosur-EU agreement produces its most direct effects. However, only US$709 million of Brazilian exports to the bloc (relative to the 2025 value) will have immediate tariff elimination upon the agreement's entry into force, which corresponds to about 3% of the total exported by Brazilian agribusiness.

Although this aggregate percentage is relatively modest, it focuses on specific products in which the European Union maintains significant import volumes and where Brazil already has a competitive presence in the global market. This is the case with fruits and nuts, whose sales to the European Union account for approximately 50% of Brazilian exports. A similar situation occurs with wool (97%), powdered peppers and spices (92%), sweet potatoes (50%), corn oil (49%), wines (33%), and hides (17%).

European Union share of exports of selected products with immediate tariff elimination (percentage relative to dollar value)

From the perspective of Brazilian exports, these products represent a significant portion of sales directed to the European bloc, indicating high exposure to this market. However, when observing imports from the European Union, it is noted that, in several of these segments, Brazil still holds a relatively limited share of total imports, such as in fruits and nuts, forestry products, processed proteins, and animal feed. Tariff elimination tends to operate less as an opening of new markets and more as a factor in gaining relative competitiveness in supply chains where the European Union already has consolidated import demand.

Brazil's share of European imports of selected products with immediate liberalization (percentage relative to dollar value)

In these segments, tariff removal tends to immediately improve access conditions to the European market, especially in supply chains that are more price-sensitive. At the same time, tariff reductions create room for future expansion by lowering the cost of entry into markets where the European Union already has consistent import demand.

Nevertheless, the aggregate commercial effects of the agreement tend to be limited. Mercosur's export portfolio to the European Union remains highly concentrated in products that already enter the bloc without tariffs, representing almost 70% of the total. In contrast, several products still subject to high tariffs will continue to be protected through tariff quotas, such as meat (beef, pork and chicken), sugar and honey, among others.

In addition to the quantitative restrictions imposed by these quotas, the agreement incorporates safeguards recently adopted by the European Union that allow for the suspension of trade concessions in the event of increased imports and damage to local production. Although such mechanisms are common in trade agreements, the creation of specific instruments for agribusiness reinforces the structurally protectionist character of European trade with regard to agriculture. In the case of Mercosur, these safeguards provide for the automatic opening of investigations when there is an increase in volume accompanied by a reduction in relative prices, based on annual assessments.

Therefore, although the immediate opportunities opened up by the agreement are limited in aggregate terms, they are relevant to specific segments of Brazilian agribusiness. The tariff elimination affects supply chains in which Brazil already has a competitive presence in the European market. These gains tend to be particularly significant for small and medium-sized producers, who are more sensitive to costs and relative prices. This is the case for sectors such as fruits and nuts, essential oils, peppers and powdered spices, where the tariff reduction can generate immediate income increases.