1. Tariff treatment after 1 May 2026: the new position for European exporters
On 17 January 2026, the European Union and Mercosur formally signed the EU–Mercosur Agreement in Asunción. It consists of two legally distinct instruments: (i) the comprehensive Partnership Agreement (EMPA), and (ii) the Interim Trade Agreement (ITA), which contains the core trade and tariff liberalization provisions.
The signing did not by itself trigger preferential tariff treatment. Until provisional application of the ITA, Brazil and the other Mercosur members remained free to adjust their ordinary import-tariff regimes, subject to domestic law, Mercosur rules and WTO commitments.
Brazil made use of this flexibility shortly after signature. On 4 February 2026, it adopted Resolution GECEX No. 852/2026, increasing import duties on certain capital goods and information and telecommunications goods.
Since 1 May 2026, however, the position for European exporters is materially different. Brazil may continue to adjust its ordinary Most-Favoured-Nation (MFN) tariffs, but such increases do not alter the negotiated tariff basis applicable to qualifying EU-origin goods under the ITA.
2. From political signature to legal effect
The EMPA is the comprehensive framework and combines political dialogue, cooperation and a trade and investment pillar. As a mixed agreement, its full entry into force on the EU side requires ratification by all EU Member States. The ITA reflects the trade and investment liberalisation pillar of the EMPA and operates as a stand-alone agreement until the EMPA enters into force. Since it falls within the European Union’s exclusive competence, it could be applied provisionally without waiting for national ratification of the EMPA.
The European Parliament’s consent to formal conclusion remains pending following its request of 21 January 2026 for an opinion from the Court of Justice of the European Union on the agreement’s compatibility with the EU Treaties.
3. Brazil’s MFN tariff policy and the ITA limit
Brazilian import tariffs are set within Mercosur’s Common External Tariff (CET/ TEC). At domestic level, tariff changes are generally implemented through GECEX resolutions by reference to the Mercosur Common Nomenclature (NCM), the eight-digit tariff classification used for customs purposes in Mercosur.
Brazil may continue to change its ordinary MFN duties. For EU exporters, however, the relevant issue is how those changes affect the preferences granted under the ITA.
The preferential reductions are calculated from the Base Rates listed in the ITA tariff schedules. Importantly, a subsequent increase of the applied MFN rate above the Base Rate does not replace that negotiated starting point: the preferential reduction for qualifying EU-origin goods continues to be calculated from the ITA Base Rate.
The ITA also contains a lower-MFN rule. If a Party reduces its applied MFN duty below the Base Rate for a tariff line, the lower rate replaces the Base Rate for calculating the preferential duty for as long as it remains lower. The mechanism is therefore asymmetric: an MFN rate above the Base Rate does not raise the ITA calculation basis, whereas an MFN rate below the Base Rate may improve it.
Brazil’s applied rate is not determined by the CET/TEC alone. Under Mercosur’s mechanism for trade imbalances arising from the international economic situation, known in Brazil as DCC, import duties may be raised temporarily above the CET. Measures may apply for up to 12 months and may be renewed.
For qualifying EU-origin goods, these measures must be considered together with the ITA’s Base Rate mechanism. To qualify, goods must satisfy the product-specific origin rules in Chapter 3 of the ITA, and the importer must claim preferential treatment at the point of customs clearance on the basis of a statement on origin issued by the EU exporter.
4. The Base Rate mechanism in practice
The mechanism is easiest to understand by looking at a single tariff line. For this purpose, we consider NCM 2905.32.00. This NCM covers propylene glycol, or propane-1,2-diol. In the ITA schedule, it has a Brazilian Base Rate of 12% and staging category 10. Resolution GECEX No. 845/2026 increased the applied MFN duty for this product to 20% for the period from 19 January 2026 to 18 January 2027.
However, for EU-origin goods that qualify under the ITA, the 20% MFN rate does not become the new starting point. The preferential reduction is still calculated from the 12% Base Rate in the ITA schedule.
Under the ITA, staging category 10 provides for import duty elimination in 11 equal annual stages. “Year 0” runs from 1 May 2026 to 31 December 2026, with later reductions taking effect each 1 January. The first ITA reduction therefore lowers the applicable preferential duty from the 12% Base Rate to approximately 10.9%. The rate will reach 0% on 1 January 2036.
From 1 May 2026, qualifying EU-origin goods under NCM 2905.32.00 are thus subject to a preferential tariff of approximately 10.9%, compared with the ordinary MFN rate of 20%. The initial preference margin compared with non-EU-origin goods is therefore around 9.1 percentage points and increases as the preferential tariff is reduced, provided that the higher MFN rate remains in force.
5. Conclusion for market participants
Brazil may continue to adjust its ordinary MFN tariffs. Since 1 May 2026, however, qualifying EU-origin goods must also be assessed under the ITA tariff schedule.
For European companies exporting to Brazil, this means that recent Brazilian tariff increases should not automatically be incorporated into landed-cost calculations for EU-origin goods. Each product should instead be checked against its NCM classification, ITA Base Rate, staging category, current Brazilian tariff and origin status. The difference can already be commercially significant.
Download R & S 2026 – Volume 3: https://www.ahkbrasilien.com.br/br/content/download/987024/19752102?version=2
Source: https://www.ahkbrasilien.com.br/de/publicacoes/recht-steuern-in-brasilien
