EU and Brazil Forge Green Trade Pact Amid Looming Political Shifts

The European Union and Brazil launched a renewed economic partnership at the São Paulo Investment Forum on May 29, 2025, signing a Letter of Intent to boost sustainable trade and clean energy projects.

EU Ambassador Marian Schuegraf emphasized “unprecedented alignment” between Brussels and Brasília, with bilateral trade valued at €89.5 billion in 2024.

The EU remains Brazil’s second-largest trading partner, importing 38% agricultural goods and 26% oil while exporting machinery (26.3%) and chemicals (24.5%).

The agreement targets renewable energy, green hydrogen, and transport infrastructure, backed by firms like Italy’s Enel and Brazil’s Embraer.

Enel’s Riccardo Pozzi confirmed plans to expand solar and wind projects in São Paulo and Ceará, while Embraer highlighted 350 aircraft operating in Europe.

ApexBrasil President Jorge Viana and European Council leader António Costa endorsed plans to streamline customs and expand the Tietê-Paraná waterway to handle rising cargo volumes.

Beneath recent optimism, political instability simmers. Brazil’s 2026 election nears with President Lula’s 47% approval against 53% disapproval, per March 2025 polls.

Critics highlight stagnant growth and inflationary pressures, echoing EU leaders’ struggles ahead of France’s 2025 elections and Europe’s shift toward nationalist politics.

EU-Mercosur Trade Deal

The EU-Mercosur trade deal, finalized in December 2024 after 25 years of talks, faces ratification hurdles as European farmers protest tariff cuts on Brazilian beef and ethanol.

The pact aims to lift annual Brazil-EU trade by 5.1%, phased over 15 years, but relies on political continuity. Brazil’s Ecological Transformation Plan and the EU’s Global Gateway Strategy align technically, yet both blocs confront rising protectionism.

With the U.S. election cycle adding uncertainty, executives privately acknowledge deals may stall if Lula loses in 2026 or EU populists gain ground. For now, businesses capitalize on immediate opportunities.

EU firms seek lithium and rare earths for electric vehicles, while Brazil angles for semiconductor investments. “This isn’t about ideology—it’s supply chain math,” said a European trade official, noting China’s 21% share in Brazilian exports.

The forum’s 200 delegates closed $780 million in preliminary deals, testing whether short-term gains can outlast volatile politics.