EU-Mercosur Agreement 2026: Complete Guide for German Companies Exporting to Brazil

After 25 years of negotiations, the EU-Mercosur Interim Trade Agreement (iTA) entered provisional application on 1 May 2026, covering all four Mercosur member states: Argentina, Brazil, Paraguay and Uruguay.

The EU-Mercosur partnership is not one agreement but two parallel legal instruments signed in Asunción, Paraguay, on 17 January 2026: the EU-Mercosur Partnership Agreement (EMPA), which covers the full scope of political, economic and cooperation relations; and the Interim Trade Agreement (iTA), which isolates the trade pillar and can be applied without requiring ratification by all 27 EU member states.

The tariff dismantling schedule — set out in Annex 2-A of the agreement — commenced on 1 May 2026 and runs for up to 15 years, depending on product category.

From a German perspective, the breakthrough is both commercially significant and politically symbolic. Germany has been among the most consistent advocates for the agreement within the EU Council. The Federation of German Industries (BDI) described the adoption as "an important success for the German and European economies", noting the EU's continued relevance as a geostrategic actor in a period of rising protectionism.

Germany is Mercosur's largest European trading partner in most industrial categories. In 2024, Germany exported USD 14 billion in goods to Brazil alone.

The top five export categories were: machinery and nuclear reactors (USD 3.15B), vehicles and automotive parts (USD 1.73B), electrical and electronic equipment (USD 1.32B), pharmaceutical products (USD 1.20B), and organic chemicals (USD 1.07B). Every one of these categories faces or has faced significant Brazilian import duties — in most cases, between 14% and 35%.

"When a German machinery manufacturer quotes a Brazilian buyer, the 14 to 20% import tariff is a cost that either gets passed to the buyer or absorbed in margins. Under the iTA, that cost disappears."

The automotive sector deserves a particular note. In 2024, German manufacturers produced approximately 524,000 passenger cars in Brazil and Argentina, yet exported only 25,700 from Germany to all Mercosur countries — a direct consequence of the 35% import tariff making German-origin vehicles commercially non-viable for most Brazilian buyers. The iTA begins reducing this barrier, though the full automotive phase-in runs 15 years.

The following table consolidates the tariff reduction commitments most relevant to German exporters, drawn from the European Commission's official factsheet and the iTA Annex 2-A tariff schedule.

Scroll horizontally to see the full table

Preferential tariff treatment is not automatic. To benefit from reduced duties in Brazil, goods must satisfy the rules of origin set out in Chapter 3 and Annex 3-B of the iTA — and the exporter must provide proof of that origin at the time of export.

A product that does not meet origin requirements will be cleared at the standard MFN (Most Favoured Nation) rate, regardless of whether a Statement on Origin accompanies it. Under the iTA, a product is considered to originate in the EU if it is either wholly obtained — entirely produced or manufactured in the EU — or sufficiently processed — the product underwent processing in the EU that satisfies the product-specific rules in Annex 3-B.

For German manufacturers with complex supply chains involving components from non-EU countries (e.g., electronics from Asia), the origin qualification is not guaranteed and requires a supply-chain-level analysis. The entire production chain must be documented.

One of the less-discussed but commercially significant provisions of the iTA is the inclusion of government procurement access — for the first time, EU companies may bid for Brazilian federal public contracts on the same terms as local Brazilian companies.

Brazil's federal procurement market alone exceeds €8 billion per year. Sectors where German companies have a natural competitive advantage — infrastructure, industrial equipment, medical technology, engineering services — are directly exposed to this opening.

For German multinationals with an existing Brazilian subsidiary (filial or LTDA), the iTA creates both opportunities and new obligations that must be managed carefully.

The following steps represent the minimum compliance and optimisation agenda for any German company currently exporting to Brazil or planning to do so.

The Interim Trade Agreement is a transitional instrument. It will eventually be repealed and replaced by the full EU-Mercosur Partnership Agreement (EMPA), once the latter has been ratified by all 27 EU member states.

That ratification process — which requires national parliaments across the EU — is expected to take several years and faces political headwinds in France, Austria, Ireland and Poland. For operational purposes, German companies should plan around the iTA as the governing instrument for the foreseeable future.

At BPC Partners, we help clients navigate Brazil's regulatory, tax and customs environment — from first export to full subsidiary establishment. Our São Paulo-based team specialises in guiding European multinationals, particularly German companies, through every stage of their Brazil journey.