After 25 years of negotiations, the European Union and South America’s Mercosur group have reached a comprehensive trade agreement that is transforming regional economic and political dynamics, highlighting the limits of pressure tactics adopted by US President Donald Trump’s administration.
Officials and observers believe the agreement demonstrates how South American governments are increasingly seeking diverse global links over sole alignment with Washington.
The pact connects the EU to Mercosur’s main economies, Brazil, Argentina, Paraguay, and Uruguay, and significantly strengthens trade contacts between the two areas.
It comes at a time when South American trade with China has grown dramatically in recent decades, while the United States’ economic power has progressively diminished across much of the region.
The United States’ influence is dwindling due to competing partnerships
Even as the Trump administration has pushed to reestablish US supremacy and garner greater regional fealty, countries from Brazil to Peru have shown little desire to reduce their expanding ties with China or Europe.
In most of South America, these partners have already eclipsed the United States as major trading partners.
Rather than stalling the EU-Mercosur discussions, several analysts believe Washington’s tough position has sped the agreement’s completion after years of delays.
Ignacio Bartesaghi, a foreign policy consultant who has worked with several Uruguayan governments, contended that broader global dynamics were significant.
“If credit for this deal goes to anyone, it is the international context,” he said, citing Trump’s tariff war, the turmoil in Ukraine, and recent developments in Venezuela.
Pressure tactics and political fallout
Trump’s efforts in Latin America have been aggressive and diverse.
His administration launched a commando raid to depose Venezuelan President Nicolas Maduro, opening the door for a replacement government seen as more sympathetic to US interests.
The move mirrored previous attempts to influence internal politics in the area.
Last year, Trump threatened to shut off US financial aid to Honduras unless a conservative candidate won the presidential election.
In Argentina, billions of dollars in loans were contingent on conservative victories in midterm elections.
Trump also put high tariffs on Brazilian imports in an attempt to block the prosecution of former President Jair Bolsonaro, a close supporter.
Despite voter support for Trump-backed candidates in Honduras and Argentina, Bolsonaro was ultimately convicted.
Soon after, the United States government removed the majority of the recently imposed tariffs on Brazilian exports.
The White House backed the administration’s strategy.
“The return of America’s preeminence in the Western Hemisphere, led by President Trump, is undisputed,” spokesperson Anna Kelly said, adding that Trump’s foreign policy has restored US strength after what she called years of weakness.
A rejection of unilateralism
Trump has consistently denounced multilateral institutions and international standards, and the US has withdrawn from a number of global agreements.
He has also publicly rejected the need for international law. Few governments in Latin America appear to be persuaded by that position.
Argentina’s President Javier Milei, one of Trump’s closest supporters in the region, lauded the US-backed detention of Maduro.
However, his foreign minister, Pablo Quirno, praised the EU-Mercosur accord as a win for “clear rules and freedom.”
Venezuela was suspended from Mercosur in 2016 for failing to meet its trade and human rights obligations.
A Brazilian official close to the presidency, speaking anonymously about internal debates, hailed the EU agreement as a “breath of fresh air” during one of the most disastrous weeks for multilateralism in decades.
Setting a broader precedent
According to former Brazilian trade secretary Welber Barral, the agreement struck this month could spur Mercosur to finish additional trade treaties, such as discussions with Canada and the United Arab Emirates.
He stated that countries are increasingly looking for regional regulations on which they can trust rather than relying on the World Trade Organisation, which he claims Trump has damaged.
The EU-Mercosur agreement fits a broader pattern.
Countries targeted by US tariffs have sought alternate arrangements, such as Indonesia’s trade agreement with the EU and a vow by Japan, South Korea, and China to enhance regional trade.
Margaret Myers of the Inter-American Dialogue stated that the agreement demonstrates a broader commitment to global norms.
“At a time when the US is breaking from the status quo, parts of Latin America appear to be upholding it,” she added. She referred to this as “a wake-up call for the US.”
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