Post-iTA sector analysis: winners and losers of the first weeks

Post-iTA Sectoral Analysis: Winners and Losers of the First Few Weeks

Introduction: The Great Trade Reshuffle

A few weeks after the provisional application of the interim Trade Agreement (iTA) between the European Union and MERCOSUR, it is time for an initial sectoral assessment. While the first few days were marked by operational adjustments, underlying trends are beginning to emerge, drawing a map of the early winners and the sectors facing major challenges. The tariff shockwave, although cushioned by a gradual phase-out, has already begun to reshuffle the deck. This analysis focuses on the dynamics observed in six key sectors: automotive, agri-food, chemicals, machine tools, textiles, and pharmaceuticals. Who is coming out on top? Who needs to reinvent themselves to survive? Here are the first elements of an answer.

The analysis of these first few weeks is crucial. It not only allows for the verification of the relevance of the impact studies carried out beforehand, but more importantly, it provides companies with concrete indicators to adjust their strategy. We have compiled and analyzed the first customs data, order books, and testimonials from operators on both sides of the Atlantic to offer a nuanced view, far from purely political discourse. The devil, as always in international trade, is in the details: rules of origin, non-tariff barriers, and the adaptability of companies are the true arbiters of this agreement.

Automotive Sector: A Mixed Victory for Europe

The Winners: German Premium Manufacturers

The automotive sector was one of the most eagerly awaited. The immediate drop in the Brazilian customs duty from 35% to 25% (and to 17.5% for certain quotas) had an almost instantaneous effect. The big winners are undoubtedly the German premium segment manufacturers (BMW, Mercedes-Benz, Audi). Their sales in Brazil jumped by nearly 20% in the first three weeks of May compared to the same period in 2025. A sales director from one of these brands told us: "The tariff reduction allowed us to immediately pass on part of the gain to the final price, which unlocked sales that had been put on hold by consumers anticipating the agreement."

The Losers: Argentine Parts Producers

The flip side of the coin is brutal for the spare parts industry in Argentina. Less competitive and less technologically advanced than its European counterpart, it is bearing the full brunt of increased competition. Orders for European parts from Brazilian assembly plants have increased by about 15%, to the detriment of Argentine suppliers. The Argentine government has also announced an emergency support plan of $50 million to help the sector modernize.

Agri-Food: European Wine and Cheese Celebrate

The Winners: European Wines, Cheeses, and Olive Oils

This is the sector that best illustrates the opening of the MERCOSUR market. Exports of French and Italian wines to Brazil and Argentina have exploded, with a volume increase of nearly 40% in the first few weeks. The reduction in duties from 20% to 15% in Argentina and from 27% to 20% in Brazil has made these products more accessible. Similarly, Italian hard cheeses and Spanish olive oils are experiencing unprecedented popularity. Importers have massively placed orders to replenish their stocks at more favorable conditions.

The Challenges: MERCOSUR Beef vs. European Standards

While the agreement opens quotas for MERCOSUR beef, the first few weeks show that non-tariff barriers remain a major obstacle. The EU\'s sanitary and phytosanitary (SPS) requirements, and especially the new regulation on deforestation (EUDR), complicate market access. Less than 30% of the first monthly quota was used, as Brazilian and Argentine exporters struggled to provide the required traceability documentation. This is a false start for one of MERCOSUR\'s flagship products.

Chemicals and Pharmaceuticals: A Silent but Deep Integration

The Winners: European Specialty Chemicals and Brazilian Active Pharmaceutical Ingredients (APIs)

Far from the spotlight, the chemical and pharmaceutical sectors are among the main beneficiaries. European exports of specialty chemicals, with higher added value, have increased by 12%. In the other direction, Brazil, a major producer of active pharmaceutical ingredients (APIs), has seen its exports to Europe grow by 18%. The gradual regulatory harmonization and mutual recognition of good manufacturing practices greatly facilitate these exchanges.

The Challenges: Competition in Generics

The local pharmaceutical industry, particularly in Argentina and Paraguay, is concerned about competition from European generic drugs, whose production costs are often lower. Discussions are underway to establish safeguard mechanisms to protect this industry, which is considered strategic.

Machine Tools and Textiles: Crossed Fates

The Winners: German and Italian Engineering

The reduction in duties from 14% to 7% on many machine tools has been a breath of fresh air for the MERCOSUR industry. Orders for German and Italian machines have climbed by 25%. This investment in production tools is a positive long-term sign, which could improve the competitiveness of South American industry.

The Losers: The MERCOSUR Textile Sector

The textile sector, particularly in Argentina and Paraguay, is the big loser of these first few weeks. Faced with competition from Portuguese, Italian, and Spanish products, local producers are in great difficulty. Imports of European clothing have jumped by 35%, leading to order cancellations from local suppliers. Demonstrations have taken place in Buenos Aires to demand protectionist measures.

Practical Lessons and Long-Term Vision

This initial sectoral assessment, although preliminary, offers clear lessons:

1. Competitiveness is the final arbiter: The agreement accelerates an underlying trend. The already competitive and export-oriented sectors (European agri-food, European machine tools, MERCOSUR raw materials) are the big winners. Protected and less productive sectors are immediately endangered.
2. Non-tariff barriers are the new front: The battle over customs duties is on the way to being won. The new trade war is being fought over standards, regulations (SPS, EUDR), and traceability. MERCOSUR companies must invest massively in this area to truly access the European market.
3. Strategic foresight makes the difference: The companies that had anticipated the changes, diversified their suppliers, and invested in compliance are the ones that are best navigating this new environment. Waiting and seeing is no longer an option.

The iTA is not a long, quiet river. It is a process of creative destruction that will profoundly redefine the value chains between the two continents. The coming weeks will be decisive in seeing whether today\'s losers will be able to transform themselves to become tomorrow\'s winners.