What EU-Mercosur tariff cuts are actually worth in Brazil

Two things sit between the headline and your invoice. The reduction schedule runs off base rates that Brazil no longer applies, and the rest of the Brazilian import tax stack does not move at all. Work through both and the answer changes shape.

The short version: in 2026 the preference can cost you more

For several product categories the preferential rate available this year is higher than the ordinary duty Brazil already charges. Claiming the preference would leave you worse off.

The reason is arithmetic. The agreement's reduction schedule is written against base rates recorded in the tariff annex, and on many lines the duty Brazil charges today sits below that base. The size of the gap matches the horizontal 10% cut Brazil made to its common external tariff in 2022 and 2023, although the annex does not state that as the cause. In the slowest staged category the first year removes only 6.3% of the base rate, which does not cover the 10% gap.

Product	NCM	Preferential rate, year 0	Duty applied today	Lower rate
Lip make-up	3304.10.00	16.87%	16.20%	ordinary duty
Submersible pumps	8413.70.10	13.12%	12.60%	ordinary duty
Filled chocolate, inside quota	1806.31.10	18.70%	18.00%	ordinary duty

From 1 January 2027 the position reverses. Lip make-up drops to 15.75%, submersible pumps to 12.25%, chocolate inside the quota to 17.30%. All three then beat the ordinary duty.

Rates checked on 7 September 2026 against Portal Único Siscomex and the tariff annex.

This does not apply to every code, and the exception matters

The gap only exists where Brazil's applied rate sits below the annex base rate. Where it does not, the preference helps immediately.

The clearest example is inside a single subheading. Code 8413.70.80, centrifugal pumps with a flow rate up to 300 litres a minute, carries the same 14% base rate in the annex as its neighbours, but Brazil applies 20.00% to it today. Its category 15 preferential rate of 13.12% therefore beats the ordinary duty from the first year.

So the rule is conditional, and it has to be checked per line: compare the preferential rate for your staging category against the duty your product actually attracts now. Two lines that look almost identical in the tariff can give opposite answers.

Why the base rate is not the rate you pay

Every tariff line in the annex carries a base rate, and every reduction is expressed as a share of that base. The base rates were fixed when the schedule was drawn up. They were not updated when Brazil later cut its applied tariff.

For three of the four codes we verified, the applied rate equals the base rate multiplied by 0.9 exactly: 14% becomes 12.60%, 18% becomes 16.20%, 20% becomes 18.00%. That matches the horizontal 10% cut Brazil made to its common external tariff. The annex does not state that as the cause, and we are not asserting it as a finding. The figures line up, which is enough to explain the pattern and enough to warn you about it.

The practical consequence: a duty saving calculated from the rate on your last customs declaration will be wrong. The schedule does not start from there.

Even when the preference works, you keep about three quarters of it

Suppose the preference is live and better than the ordinary duty. A cut of, say, 18 percentage points in the import duty does not cut your landed cost by 18%.

Across four modelled product categories, duty cuts of 12.6 to 18 percentage points produced landed cost reductions of 10.0% to 13.9%. That is 74% to 79% of the headline figure, averaging around 77%.

This is not an artefact of the examples. It follows from how Brazil stacks its import taxes.

The formula, and the part of it that surprises people

Brazilian import taxes are cascading but not uniformly so. The import duty feeds the IPI base and the ICMS base. PIS/COFINS-Importação and AFRMM do not depend on the duty at all: they are charged on the customs value and on freight respectively, whatever the duty happens to be.

Write V for customs value, i for the duty rate, p for IPI, s for the combined PIS and COFINS rate, a for AFRMM in absolute terms, and t for ICMS:

``` Landed cost now L0 = [ V(1+i)(1+p) + sV + a ] / (1 - t) Landed cost after L1 = [ V(1+p) + sV + a ] / (1 - t)

Saving = (L0 - L1) / L0 = V(1+p)i / [ V(1+i)(1+p) + sV + a ] ```

Two things fall out of this.

First, the saving is always strictly smaller than the duty rate. The denominator contains terms that the numerator does not, and those terms are exactly the taxes that ignore the duty. There is no combination of rates that makes a duty cut pass through at full value.

Second, and less obviously, t cancels. The ICMS rate disappears from the percentage saving entirely.

Your state changes the bill, not the share

That second point is worth sitting with, because ICMS varies enormously across Brazil and importers spend real effort choosing a port of entry around it.

São Paulo charges 18% as its standard internal rate, and 25% on the category it classifies as supérfluos, which includes wine, spirits, perfumery and cosmetics. Rio de Janeiro charges 20% plus a 2% state fund contribution, so 22% in effect, and 37% plus 2% on the same supérfluos category, so 39%.

For a cosmetics importer that is the difference between 25% and 39% on the largest single line of the tax bill. It changes the landed cost substantially. It changes the percentage of the tariff cut that reaches your bottom line not at all.

Both figures are correct and they describe different things. A source quoting 18% for São Paulo and 20% for Rio is quoting the standard rates; a source quoting 25% and 39% is quoting the supérfluos rates. Which one applies depends on what you ship.

Worked examples

All four lines below were checked on 7 September 2026. Duty, IPI, PIS and COFINS come from the official customs simulator in Portal Único Siscomex, run with a German origin and a customs value of R$ 100.00. Staging categories come from the tariff annex.

Industrial pump, NCM 8413.70.90: excluded outright

Staging category E. In the words of the annex, goods in this category "serão excluídos das preferências tarifárias e permanecerão na alíquota-base": excluded from tariff preferences and held at the base rate.

There is no schedule and no end date. The duty stays where it is for the life of the agreement. Applied duty today 12.60%, IPI 0%, PIS 2.10%, COFINS 10.25%.

An exporter reading that machinery duties fall to zero over ten years across 93% of lines would calculate a saving here. There is none, and there never will be.

Lip make-up, NCM 3304.10.00: fifteen years

Staging category 15. Base rate 18%, eliminated in sixteen equal annual steps, duty free from 1 January of year 15. With provisional application starting in 2026, that lands around 2041.

Year 0 removes 6.3% of the base, giving 16.87% against an applied duty of 16.20%. Year 1 removes 12.5%, giving 15.75%, which finally beats it.

Cosmetics also carry a single stage PIS and COFINS regime: 3.52% and 16.48%, 20.00% combined, set by article 8 §2 of Lei 10.865/2004 as amended by Lei 13.137/2015. IPI is 14.30%. Add the supérfluos ICMS band and this is one of the heaviest tax stacks a European exporter will meet in Brazil, and the tariff line is the smallest part of it.

Filled chocolate, NCM 1806.31.10: a quota, not a schedule

Staging category CH2. In year 0 the rate inside the quota is 18.70% on a volume of 1,890 tonnes for the entire European Union, allocated first come first served with no country shares. Above that volume the rate is 20%.

Brazil applies 18.00% today. So inside the quota the preference costs more than the ordinary route in year 0, and above the quota it costs more still. The quota rises each year and the rate falls, reaching zero with no quota from year 14.

IPI 3.25%, PIS 2.10%, COFINS 9.65%.

Pumps up to 300 litres a minute, NCM 8413.70.80: the preference works now

Same subheading as the excluded line, same 14% base rate, staging category 15. But Brazil applies 20.00% to this code, well above the base, so the year 0 preferential rate of 13.12% is an immediate improvement.

This is the counterweight to everything above. The answer is not "the preference is worthless in the early years". The answer is that it depends on a comparison you have to run for your own code.

The wider picture across the schedule

The Mercosur offer contains 10,029 tariff lines. Their distribution says more about the agreement than any sector average.

Staging category	Lines	Share
10 years	3,520	35.1%
4 years	2,225	22.2%
8 years	1,370	13.7%
Immediate	1,075	10.7%
15 years	900	9.0%
Excluded	894	8.9%
Quota and conditional categories	45	0.4%

Just over one line in ten goes to zero on day one. Roughly one in eleven is excluded from the agreement permanently. Everything else is a schedule measured in years.

Three effects that push the real number lower still

Substitution tax. For finished consumer goods sold through retail, Brazilian states often apply ICMS substituição tributária, which brings forward tax on an assumed retail margin. It is not in the model above and it enlarges the part of the landed cost that the tariff cut does not touch.

Existing duty exemptions. A significant share of capital equipment already enters Brazil at 0% duty through the ex-tarifário regime, which has nothing to do with trade agreements. Where that applies, the agreement changes nothing because there was no duty to remove.

The horizon. Categories 10 and 15 together cover 44.1% of lines. For those, the full elimination is a date in the 2030s. The saving available in any given year is a fraction of the eventual one, and the fraction in the early years is small.

What to do with this in a pricing model

Start from your own code, not from the sector. Pull the current applied duty and the annex base rate, and check whether the base is higher, lower or the same. That comparison decides whether the preference is worth claiming at all this year.

Then model the saving on landed cost rather than on duty. Expect roughly three quarters of the duty reduction to survive the cascade, and treat the rest of the stack as fixed, because the agreement does not touch it.

Finally, put a review date on the model. Staging steps land every 1 January. Brazilian rates move on their own schedule through acts of Gecex and Camex, several times a year. A model built once and left alone will drift out of accuracy in both directions.

Sources

• Tariff staging categories, base rates and the annual reduction table: Annex 2-A and Appendix 2-A-2 to the EU-Mercosur Interim Trade Agreement, Mercosur schedule, published by the Brazilian government. Checked 7 September 2026.
• Applied import duty, IPI, PIS and COFINS by NCM code: Portal Único Siscomex, Classif module, tax treatment simulator, German origin, customs value R$ 100.00, query date 7 September 2026. The portal notes that displayed values are indicative and that the binding rate is the one determined when the declaration is registered.
• PIS and COFINS rates and the single stage regime for perfumery and cosmetics: Lei 10.865/2004, article 8, items I and II and §2, as amended by Lei 13.137/2015.
• ICMS rates: RICMS/SP, Decreto 45.490/2000, articles 52 and 55 for São Paulo; Lei 10.253/2023 and Lei 2.657/1996 article 14 VII for Rio de Janeiro, with the state fund contribution under LC 210/2023.
• Provisional application from 1 May 2026: Decreto nº 12.953/2026 of 28 April 2026.
• Tariff elimination on 91% of EU exports: European Commission.

Rates and staging categories on this page were verified on 7 September 2026. Brazilian tariff and tax rates change several times a year through acts of Gecex, Camex and the Receita Federal. Check the date above before relying on any figure here.