Argentina’s Trade Deficit with Brazil Could Shrink by More Than 50% in 2026

Argentina’s trade deficit with Brazil could end 2026 at less than half the level recorded last year, amid declining Argentine imports from its largest trading partner within Mercosur. The bilateral trade deficit is projected to reach approximately $2.3 billion, compared with $5.201 billion in 2025.

The forecast comes from consulting firm Abeceb, which estimates that Argentina accumulated a trade deficit of $1.956 billion between January and October, a reduction of $3.141 billion from the same period last year, when the deficit reached $5.098 billion.

The improvement is mainly attributable to weaker Argentine demand for Brazilian products. During the first ten months of 2026, imports from Brazil fell 17.1% year over year, while Argentine exports to the Brazilian market increased 4%. The difference between these two trends explains much of the reduction in the trade imbalance.

The bilateral trade balance also improved in October. Argentine exports totaled $1.260 billion, up 1.8% from the same month in 2025, while imports reached $1.530 billion, down 6.7%. As a result, the monthly deficit stood at $270 million, compared with $401 million a year earlier.

The decline in imports was driven primarily by the automotive sector, which accounted for most of the decrease. Imports across the four main product categories associated with the industry—passenger cars, utility vehicles, parts and accessories, and passenger transport vehicles—totaled $480 million, compared with $644 million in October 2025.

The contraction occurred amid weaker activity in Argentina’s automotive industry and slowing domestic demand. Imports of passenger cars from Brazil fell 27.9% year over year to $225 million, while purchases of parts and accessories declined 18%. Meanwhile, production by Argentine automakers dropped 14.4% in October.

Slower industrial activity and weak consumption are also evident in overall import trends. According to the report, Argentine purchases of Brazilian products have declined for 12 consecutive months, contrasting with the first ten months of 2025, when they had increased 40.3%.

Not all sectors, however, followed the same trend. Argentine imports of electricity from Brazil rose 198.1% in October compared with a year earlier, reaching $108.5 million. According to the analysis, the increase may have been driven mainly by cost considerations, as Brazilian electricity was reportedly cheaper than domestic thermal power generation.

Purchases of metal inputs also increased. Imports of rolled steel products, copper and zinc totaled $56 million, approximately $31 million more than a year earlier. Imports of civil engineering equipment nearly doubled, reflecting stronger demand for capital goods used in infrastructure, energy and mining projects.

Argentine Exports to Brazil

On the export side, Argentina’s performance in October was supported primarily by the energy, petrochemical and agribusiness sectors. Although the automotive industry remained the country’s leading export sector to Brazil, its sales declined again, limiting growth in overall shipments.

Exports of vehicles for goods transportation and special purposes fell 22.2% year over year to $279.3 million. Passenger car exports also declined, dropping 17.9% to $153.4 million. Together, the two segments recorded a revenue loss of nearly $113 million compared with October 2025.

By contrast, the energy and petrochemical sector contributed an additional $79 million to Argentine exports. Crude oil was among the leading products, with sales to Brazil rising from $1.2 million to $54 million in one year, amid expanding production in Vaca Muerta.

Exports of ethylene polymers also increased, nearly doubling to $67.6 million.

Aluminum was another product that recorded positive results. Argentine exports of the metal totaled $42.1 million, up 40.2% year over year, supported by both higher international prices and increased shipment volumes.

The dairy industry also expanded its presence in the Brazilian market. Exports of cheese and curd rose 130.5% compared with October 2025, reaching $33.8 million.

Shipments of unmilled wheat and rye, meanwhile, increased 22% to $104.8 million, while barley exports recorded a sharp decline.

According to a report by the Argentine Chamber of Commerce and Services (CAC), Argentina ranked fourth among Brazil’s largest suppliers in October, behind China, Hong Kong and Macau, grouped together in the report ($7.529 billion), the United States ($5.104 billion) and Germany ($1.347 billion).

According to data obtained by Datamar, Argentina’s containerized exports to the United States reached 46,225 TEUs between January and August 2026, up nearly 38% from the same period a year earlier. Beef was among the standout export products. The chart below shows the share of the top 10 items:

Top Products Exported to the United States | Argentina | Jan-Aug 2026 | TEUs

Source: DataLiner – explore our trade data

Argentina also ranked fourth among the leading buyers of Brazilian products, behind China, Hong Kong and Macau ($8.586 billion), the United States ($4.316 billion) and the Netherlands ($1.811 billion).

Argentina’s Trade Deficit with Brazil: Outlook for the Coming Months

In the coming months, bilateral trade trends will depend on conditions in both the Argentine and Brazilian economies. Abeceb emphasizes that the reduction in Argentina’s trade deficit with Brazil is more closely related to declining imports than to any substantial expansion in exports.

The consultancy also notes that Argentina’s opening to suppliers from outside Mercosur, particularly China, continues to reduce the share of Brazilian products in the country’s imports.

On the export side, growth is expected to be supported by strong performance in the energy sector and the redirection of Argentine aluminum sales to Brazil. The pickup truck segment, however, is showing signs of weakness, while agribusiness could gain ground with the new wheat harvest and stronger Brazilian demand.

Brazil’s economic outlook also presents uncertainties. Growth forecasts have been revised downward, while the benchmark interest rate, the Selic, has been maintained at 13.75% annually. The decision could restrict credit availability and affect vehicle demand, particularly for pickup trucks manufactured in Argentina.

Another factor to monitor is the Brazilian real. A potential depreciation of Brazil’s currency could make Argentine products less competitive in the Brazilian market while making Brazilian goods cheaper for Argentine importers.

On the international front, Abeceb considers it increasingly unlikely that the United States will remove the additional 25% tariff imposed on some Brazilian exports. As a result, supplies of these products could continue to be redirected to Argentina, a trend the consultancy says is already evident in the metal inputs sector.

Conversely, the consultancy believes that Luiz Inácio Lula da Silva’s victory in Brazil’s presidential election makes a reduction in Mercosur’s Common External Tariff (CET), a proposal advocated by Bolsonaro, less likely. In Abeceb’s assessment, maintaining the tariff structure helps preserve the preferential treatment enjoyed by Argentine products in the Brazilian market.

Source: Infobae

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