A360
Key Takeaways✦ Atlas AI
01
Tariffs reduced on 91% of EU-Mercosur exports.
02
EU GDP projected to grow by 78 billion euros by 2040.
03
EU gains access to critical raw materials from Mercosur.
Atlas AI
The European Commission began provisional implementation of the long-negotiated free trade agreement between the European Union and the Mercosur bloc on May 1, 2024, moving ahead even as the European Parliament seeks a Court of Justice of the European Union (CJEU) opinion on whether the deal is compatible with EU law.
Negotiations on the agreement began in 2000, and it was signed in January 2026. Under the provisional arrangement, tariffs were removed on 91% of exports between the two blocs. The European Commission estimates the deal could add nearly 78 billion euros to EU gross domestic product by 2040 and support up to 600,000 jobs across Europe.
Industries including automotive, machinery, and pharmaceuticals—previously subject to tariffs between 14% and 35%—are expected to benefit as trade costs decline.
Critical raw materials angle
The agreement is also framed as strategically important for Europe’s access to key raw materials. Brazil supplies a large share of the EU’s imports of niobium (82%), graphite (13%), and aluminum (12%), while Argentina supplies 6% of the EU’s lithium.
Mercosur members are expected to benefit from expanded access to EU markets, as well as lower import costs and increased investment flows.
