Brazil EU-Mercosur Agreement
The EU-Mercosur Trade Agreement, which entered into force on May 1, 2026, is expected to increase 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, manufacturing equipment, and automation technologies. 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 is likely to increase price competition as Brazilian buyers compare U.S. products with lower-duty European alternatives.
One important tool for maintaining competitiveness is Brazil’s ex-tarifário regime, which temporarily reduces or eliminates import duties on qualifying capital goods and ICT equipment that are not produced domestically. The benefit is requested by a Brazilian importer and, once approved, can be applied to future imports of the approved equipment. U.S. exporters of highly specialized machinery may benefit by working with Brazilian customers and distributors to determine whether their products qualify.
The agreement also reinforces the importance of differentiating through technology, productivity gains, lifecycle cost savings, after-sales support, and local partnerships. Companies offering advanced manufacturing technologies, industrial automation, robotics, precision equipment, and other products with limited domestic production are best positioned to compete despite changing tariff preferences.
As tariff reductions are phased in over the coming years, U.S. exporters should proactively assess their tariff exposure, identify products eligible for ex-tarifário treatment, and work with Brazilian partners to preserve market competitiveness.
For additional information, please contact Moacir.Rodovalho@trade.gov, Advanced Manufacturing Commercial Specialist, U.S. Consulate General Recife.
To explore additional industry sector intelligence and insights on the Brazilian market, please see Brazil Published Market Intelligence.