First effects of the iTA: review of the first 48 hours of provisional application

First Effects of the iTA: A Review of the First 48 Hours of Provisional Application

Introduction: A Historic Turning Point for Euro-Brazilian Trade

May 1, 2026, will go down in history as a pivotal date for trade relations between the European Union and MERCOSUR. After years of complex negotiations and intense political debates, the provisional application of the interim Trade Agreement (iTA) is finally a reality. For the past 48 hours, a new trade paradigm has begun to take shape, creating both immense hope and immediate operational challenges. As privileged observers of this matter, we offer you an initial hot take, based on field observations, business reactions, and the first available data. This is not an exhaustive analysis, but a snapshot of the first hours of a new commercial era.

The stakes are colossal. We are talking about a combined market of over 780 million consumers and a bilateral trade in goods that already exceeded €88 billion in 2022. The objective of the iTA is to dismantle tariff and non-tariff barriers, simplify procedures, and stimulate investment. But between the signing of an agreement and its effective implementation on the ground, there is a world of logistical, customs, and regulatory complexities. These first 48 hours offer us a valuable first lesson on the reality of large-scale trade integration.

The First Tariff Reductions: What Has Really Changed

From the early hours of May 1, the question on the lips of all importers and exporters was: which tariff reductions apply immediately? The agreement provides for a gradual dismantling of customs duties over several years, but a significant first tranche has come into force. Our initial analyses of customs declarations confirm the expected reductions on several key products.

• Automotive Sector: European cars (HS code 8703) entering Brazil, which were subject to a 35% duty, saw this tariff immediately reduced to 25%. This is still high, but it is a substantial drop that was immediately applied by the Brazilian SISCOMEX system.
• Wines and Spirits: A bottle of French wine (HS code 2204) imported into Argentina, taxed at 20%, now benefits from a 15% tariff. The first containers cleared in Buenos Aires have confirmed this new situation.
• Machine Tools: German exports of machine tools (HS code 8458) to Brazil, crucial for local industry, have seen their customs duties fall from 14% to 7% for a wide range of products. This measure is one of the most significant of this first phase.

However, not everything has been smooth. Reports indicate confusion over some specific products, particularly processed agricultural products. For example, for certain cheeses (HS code 0406), the precise classification to benefit from the preferential tariff required clarification from the customs authorities, leading to delays for the first shipments.

Customs Processing Speed: Between Fluidity and First Bottlenecks

The promise of simplified customs procedures was at the heart of the iTA. The first 48 hours have shown a mixed picture. In major ports like Rotterdam, Antwerp, and Santos, the IT systems seem to have integrated the new rules well. Advance declarations and the Authorized Economic Operator (AEO) status have allowed many large groups to clear their goods without any notable hitches.

However, challenges quickly emerged. The main point of friction has been the management of the EUR.1 movement certificate, a key document to prove the preferential origin of goods. Several companies, especially less prepared SMEs, had their goods blocked due to formal errors in filling out these certificates. It is estimated that about 15% of the first declarations requesting the benefit of the iTA were temporarily suspended for documentary reasons. In addition, unexpected delays were reported at secondary entry points, which are less accustomed to handling such large trade flows and whose customs staff were not yet fully trained in the subtleties of the new agreement.

Business Reactions: Cautious Optimism

The reception of the agreement by the business world is mostly positive, but tinged with great caution. The major industrial federations, such as the VDA in Germany for the automotive industry or the CNI in Brazil, have hailed a "historic step". The logistics directors and sales managers contacted over the past 48 hours express relief, but emphasize the uncertainty that remains.

• Optimism of European Exporters: A French cosmetics manufacturer told us that he expects a 30% increase in his sales in Brazil by the end of the year, thanks to a duty reduction from 18% to 10% on his products. However, he immediately reinvested part of the expected savings in strengthening his customs compliance team.
• Concern of South American Producers: On the MERCOSUR side, the mood is more mixed. While exporters of agricultural raw materials are optimistic, industrial sectors, such as textiles in Argentina, fear increased competition from European products. A manager of an Argentine textile SME confessed to us: "We cannot compete with the quality and prices of Italian textiles if the barriers fall too quickly. We need to modernize, and fast."

First Data on Trade Flows and Border Challenges

It is obviously too early to have consolidated statistics, but real-time data from logistics platforms already show trends. An increase of about 10% in the volume of sea freight bookings from Europe to MERCOSUR was observed in the week preceding May 1, a sign of clear anticipation by companies. The flows of agri-food products (wines, cheeses, olive oil) and capital goods were the first to react.

The main challenges at the borders, besides documentary issues, have been logistical. The sudden increase in volumes on certain lines has put a strain on storage capacities in ports and airports. Longer than usual truck queues have been observed at land border posts between Brazil and Argentina, where the customs systems of both countries must now interface with the new requirements of the iTA.

Practical Lessons and Next Steps

These first 48 hours, although short, are rich in lessons for companies in both blocs:

1. Compliance is king: Obtaining tariff benefits is not automatic. A perfect mastery of the rules of origin and absolute rigor in documentation (EUR.1 certificate) are essential. Investing in training and customs expertise is not a cost, but a prerequisite.
2. Anticipation is key: The companies that had prepared their teams, audited their supply chain, and dialogued with their partners beforehand are the ones that have come out on top.
3. Communication with the authorities is vital: In case of doubt or blockage, a proactive dialogue with the customs authorities is essential to resolve problems quickly.

The application of the iTA is a marathon, not a sprint. These first days have highlighted the immense opportunities but also the frictions inherent in a change of such magnitude. In the coming weeks, we will analyze in more detail the sectoral impacts and the strategies that companies will have to adopt to successfully navigate this new commercial environment.