The Mercosur-EU agreement should benefit Brazilian tobacco.

The announcement of the trade agreement between Mercosur and the European Union signals the opening of new business opportunities between South America and Europe. Agribusiness is among the sectors with the greatest potential for benefit, given the prospect of reduced and, in the future, exemption from import tariffs currently applied by European countries. For Brazilian tobacco, the announcement represents the expectation of expanding business with Europe, which already accounts for more than 30% of national exports annually.

According to the text being negotiated, Brazilian tobacco exports will benefit from an annual reduction in import tariffs until the tax is completely eliminated. In practice, this could correct a competitive asymmetry, as highlighted by the president of the Interstate Tobacco Industry Union (SindiTabaco), Valmor Thesing.

“Currently, Brazil’s main competitors in tobacco exports are African countries that already benefit from tariff exemptions in accessing the European market. In recent years, Malawi, Tanzania, and Zimbabwe have consistently increased their production, which reinforces the need for Brazil to reduce trade asymmetries to preserve and expand its participation in the European bloc,” he notes.

Data from ComexStat (Brazilian Foreign Trade Statistics System, of the Ministry of Development, Industry, Trade and Services) shows that, in 2025 alone, the European Union imported US$1,12 billion worth of tobacco from Brazil, corresponding to almost 204 tons. This data confirms that the bloc is one of the main destinations for Brazilian tobacco exports.

Following the signing of the agreement, Brazil will be able to compete on a more level playing field with African countries and will be able to expand trade flows, given Brazil's position as a reliable, regular, and high-quality supplier of its product produced within the Integrated Tobacco Production System (SIPT).

Despite the very positive expectations, Thesing warns that the effects will not be immediate. The agreement still depends on institutional procedures, such as approval by the European Parliament, where some countries, like France, are still requesting adjustments to safeguard their local producers. The text also needs to be approved by the congresses of Uruguay, Argentina, Paraguay, and Brazil to come into effect.

The benefits of the economic agreement will be felt gradually, since the reduction of import tariffs—the progressive decrease in import rates—will occur over several years. "The reduction of tariffs on manufactured tobacco will take four years, and on unmanufactured tobacco, seven years," explains the president of SindiTabaco. "The expectation is that the agreement will bring benefits and generate potential for new business, due to the increased competitiveness of Brazilian tobacco in the European market," he emphasizes.