BDO Trade Update - Mercosur Agreement - April 2026

The EU-Mercosur Agreement is set to provisionally enter into force on 1 May 2026, marking a significant shift in trade between the EU and South America. With tariffs reduced or eliminated across the majority of goods, the agreement creates new opportunities for exporters while introducing quota-driven pressures for certain imports.

This update outlines the key tariff changes, sector impacts, and practical steps businesses should take now to prepare for the new trading environment.

1. Agreement Status & Timeline

  • The EU-Mercosur Agreement will provisionally enter into force on 1 May 2026, following the European Commission’s decision on 23 March 2026.


2. Summary of Tariff Changes

For EU Exporters:

91% of existing tariff lines for EU exports to Mercosur (Paraguay, Uruguay, Argentina, Brazil) will be eliminated.


Key sectors and changes:

  • Machinery & Electrical Equipment:
    • Current tariffs: 14–20%
    • Phased elimination for most products
  • Transport Equipment:
    • Current tariffs: 14–35%
    • Phased elimination; immediate reduction for cars to 25%
  • Optical, Medical, and Measuring Instruments:
    • Tariffs drop from 14–18% to 0%
  • Chemicals & Pharmaceuticals:
    • Tariffs drop from 14–18% to 0% (immediate effect)
  • Agricultural Products:
    • Tariffs fall from 27–55% to 0% in most cases over a 5–15-year horizon, depending on the product
    • 30,000 tonnes duty-free cheese quota


Export quotas and protection

  • Cheese: 30,000 tonnes duty-free quota (phased over 10 years)
  • Milk powders: 10,000 tonnes quota (after 10 years)


Protection for 2 Irish Geographical Indications:

  • Irish Cream (liqueur)
  • Irish Whiskey


For EU Imports from Mercosur:

  • 92% of Mercosur exports to the EU will see tariffs eliminated or reduced.
  • Import quotas established for sensitive products:
    • Beef: 99,000 tonnes (7.5% tariff), ~1.5% of EU production
    • Rice: 60,000 tonnes duty-free
    • Poultry: 180,000 tonnes, ~1.3% of EU production/year
  • Immediate tariff elimination on minerals (notably Niobium).


Phased quota example: rice imports into the EU

Some products have an increasing quota rate over a few years. For rice, this is a 5-year quota increase listed below:

YearDuty-Free Quota (MT)In-Quota TariffOut-of-Quota Tariff
010,0000%
MFN base rate
120,0000%MFN base rate
230,0000%MFN base rate
340,0000%MFN base rate
450,0000%MFN base rate
5+60,0000%MFN base rate



3. Economic Impact

By 2040, the European Commission projects:

  • €77.6 billion increase in EU GDP
  • Up to €50 billion in additional annual exports (+39%)
  • Up to 600,000 jobs supported across Europe

Current Irish-Mercosur trade: Valued at €3.9 billion

Strategic Considerations & Next Steps

Opportunities:

  • EU exporters (especially in machinery, transport, chemicals, pharma, and agri-food) will benefit from improved market access.
  • Irish GIs gain enhanced protection.

Risks & Challenges:

  • Agri-food imports from Mercosur are subject to quotas—monitor closely for market impacts.
  • Compliance processes will need updating to reflect new tariff schedules and quota management.

Action Items:

  1. Identify products affected by tariff changes and update pricing models accordingly.
  2. Review supply chains for opportunities and risks related to new import quotas.
  3. Update customs compliance systems ahead of May 2026.
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BDO Global Trade Services

As Global Trade becomes more complex, and more subject to risk, we can advise on your trade implications in a Geo-Political context, assess the Risk Landscape and provide pro-active duty planning, ensuring security of supply and support in accessing new markets. In addition we can provide Board Level briefings in order to support and advise in this new environment.Be sure to contact us for further information or to arrange a consultation.
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This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO to discuss these matters in the context of your particular circumstances. BDO, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it. BDO is authorised by the Institute of Chartered Accountants in Ireland to carry on investment business. BDO, a partnership established under Irish Law, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO International network and for each of the BDO Member Firms. Copyright © April 2026 BDO Ireland. All rights reserved. Published in Ireland.