Trade agreements are reshaping international commerce

In recent months, international trade has undergone a profound transformation. After raising new customs barriers, the United States signed an agreement with the European Union last August that rewrote the rules of transatlantic trade. A few days later, Brussels concluded negotiations that had lasted more than twenty-five years with Mercosur (short for the Spanish Mercado Común del Sur, or Southern Common Market), the economic bloc bringing together Brazil, Argentina, Uruguay, and Paraguay. According to the report Investments to Drive Italy Forward, presented last October by Confindustria’s Research Center, these two agreements are reshaping the balance of international trade.

The new US–EU regime, known as the Framework on an Agreement on Reciprocal, Fair and Balanced Trade, introduces a system of tariffs and reciprocal commitments reflecting the new phase of American protectionism. The European Union has eliminated tariffs on US industrial products and granted preferential access for certain agricultural goods, in exchange for 15% tariffs – not additional – on most European products, with exceptions for certain items such as pharmaceuticals, aircraft, and natural resources not available in the United States. However, very high tariffs on steel and aluminum remain in force. The new scenario represents an overall increase in customs costs for European producers, but it has avoided the tariff escalation threatened in the months preceding the agreement.
The agreement also includes “non-tariff” clauses requiring the EU to purchase energy, artificial-intelligence chips, and military equipment from the United States, and to encourage new direct investments in strategic American sectors. In addition, the strengthening of the euro against the dollar is significantly affecting the competitiveness of European goods, further favoring US domestic production. Since the beginning of the year, the dollar has depreciated by around 14%, effectively amplifying the impact of tariffs.
According to estimates by Confindustria’s Research Center, the combined effect of tariffs and a strong euro could, compared with a scenario without tariffs, lead to a reduction in Italian exports to the United States of €16.7 billion, or about 2.7% of total exports.
In the medium to long term, this imbalance could push Italian and European companies to shift part of their production to the United States in order to avoid tariffs and move closer to the North American market, especially in sectors that are strategic for security and technological leadership. The risk for European manufacturing is therefore that some of the most vital components of its production system could be weakened.

In such an uncertain context, the agreement between the European Union and Mercosur instead represents a signal of openness. After a quarter of a century of negotiations, a compromise has finally been reached that will create a free-trade area of more than 700 million people, capable of generating one-fifth of global GDP. The agreement provides for the almost complete liberalization of trade between the parties over a ten-year period and, in order to protect the quality of European products, includes the recognition of 344 EU Geographical Indications for food and beverage products.
In addition, tariff preferences will apply only to products from Mercosur that meet specific environmental, social, and phytosanitary standards. The agreement also guarantees the EU privileged access to raw materials essential for the digital and energy transition.
The agreement builds on an already well-established relationship, not only in terms of trade but also of production, as many European companies already have a strong presence in Mercosur countries, and it may pave the way for stronger European direct investment in South America.
The deal with Mercosur also offers an opportunity to regain market share in a region where China has now assumed a dominant role. According to Confindustria’s Research Center, Germany and Italy will be among the main beneficiaries of the progressive elimination of tariffs, as they are specialized in the sectors where tariff cuts will be greatest. Manufactured and capital goods in particular – such as cars, machinery, chemical and pharmaceutical products – will benefit the most, as over the next ten years tariffs currently in force will be almost completely eliminated.
For the European Union, signing new trade agreements represents a key tool to counter the fragmentation of global trade and respond to growing protectionism. In the coming years, the real challenge will be to maintain a strong domestic production capacity while at the same time fully seizing the opportunities offered by the new international agreements.

Source of graphs: Investments to move Italy forward. Autumn 2025 forecast report. Centro Studi Confindustria. Data as at 30 September 2025.

(Article by Andrea Cusi published in "CER il giornale della ceramica" No. 414, November/December 2025)