Brazil Capital Goods EU-Mercosur Agreement and Ex-Tarifario

The entry into force of the EU-Mercosur Trade Agreement on May 1, 2026, is expected to reshape competition in Brazil’s capital goods market. Under the agreement, Mercosur countries will gradually eliminate tariffs on approximately 91 percent of European products, including most industrial machinery and equipment. Many products currently subject to Brazilian import duties of 14–20 percent will eventually enter the market duty-free.

For U.S. exporters of industrial machinery, manufacturing equipment, automation systems, and specialized production technologies, the agreement could create a significant pricing advantage for European competitors. As tariff reductions are phased in over the coming years, Brazilian buyers may increasingly compare U.S. products against lower-duty European alternatives.

One mechanism that may help offset this competitive disadvantage is Brazil’s ex-tarifário regime, which provides temporary reductions in import duties for eligible capital goods and information and communications technology (ICT) equipment when there is no equivalent domestic production. The benefit is requested by a Brazilian importer and, once approved, may be used for future imports of the approved equipment.

The agreement underscores the importance for U.S. exporters to evaluate tariff exposure in Brazil and identify opportunities to maintain competitiveness through available trade-facilitation mechanisms. Companies exporting specialized industrial equipment not manufactured locally may wish to assess whether ex-tarifário treatment could improve their market position.

For additional information, please contact Moacir.Rodovalho@trade.gov, Advanced Manufacturing Commercial Specialist, U.S. Consulate General Recife.

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