Brazil footwear sector sees EU-Mercosur deal boosting competitiveness and diversification

Brazil’s footwear industry expects the European Union to become an even more strategic trade partner if the long-negotiated EU-Mercosur agreement is fully implemented, industry representatives said.

The Brazilian footwear industry closed 2025 with a positive balance in the European market, as exports to the bloc grew by 16% year-over-year. The survey, conducted by Datamar’s BI department, accounts for the total volume of footwear moved via maritime shipments. The following chart details the monthly evolution of these flows, based on statistics from the DataLiner platform:

Footwear Exports to the EU | Jan 2022 – Dec 2025 | TEUs

Source: DataLiner (click here to request a demo)

Under the deal’s tariff phase-out schedule covering 27 EU member states, Brazilian footwear exports to the bloc could rise 62% over 15 years, according to an impact study by the government-backed Institute for Applied Economic Research (Ipea).

Beyond lower prices for European buyers, the agreement could help diversify exports from key footwear hubs such as Franca in São Paulo state, Vale dos Sinos in Rio Grande do Sul and Nova Serrana in Minas Gerais. Tariff reductions would apply not only to leather footwear — Brazil’s main export segment — but also to synthetic and textile products, which currently have a smaller share of overseas sales.

“These markets account for 40% of all footwear imports worldwide. It is a highly significant bloc,” said Priscila Linck, an economist and market intelligence coordinator at the Brazilian Footwear Industries Association (Abicalçados).

The agreement, provisionally signed on Jan. 17 in Paraguay after years of negotiations, provides for the gradual reduction or elimination of import and export tariffs and establishes common rules covering industrial and agricultural goods, investments and regulatory standards.

The accord still requires approval by each Mercosur member country. Earlier this month, President Luiz Inácio Lula da Silva submitted the agreement to Brazil’s Congress.

EU’s role in Brazilian footwear exports

In 2025, Brazil exported 17.5 million pairs of shoes to the European Union, generating $105.2 million in revenue. France, Portugal, Italy, Germany and Spain were the main destinations.

In value terms, the EU accounted for 10% of Brazil’s total footwear exports.

“In recent years, with the slowdown in the international market, we lost some ground in certain EU countries, but we redirected larger volumes to other destinations — including within Europe, such as Spain,” Linck said.

Of Brazil’s total footwear exports, 44% are leather products, more than 47% are synthetic materials and about 8% are textile-based.

In addition to selling under their own brands, Brazilian manufacturers also supply European companies under private-label contracts, in which a foreign brand handles marketing and distribution.

Given Europe’s purchasing power, the bloc is viewed as a strategic alternative for Brazil, particularly amid trade restrictions and uncertainties affecting the United States, still the world’s largest footwear importer.

“It is a market that imports higher-value, traditional leather products. It becomes a strong alternative for the sector to expand abroad,” Linck said.

Tariff cuts and competitive gains

One of the key provisions of the agreement is the gradual elimination of import duties on both sides.

In the case of Mercosur countries, footwear tariffs — currently ranging from 3.5% to 17% — would be fully eliminated within up to 10 years.

Leather footwear, currently taxed at 7% in the EU, would see tariffs phased out within seven years, improving Brazil’s competitiveness against Asian suppliers that also operate in the European market.

“Our main export product will have a faster tariff phase-out, which is positive for boosting exports to European countries,” Linck said.

Although synthetic and textile footwear will face a longer tariff phase-out period and currently carry higher duties, they are expected to gain space in exports, helping diversify Brazil’s footwear portfolio.

“This opens an opportunity not only to consolidate leather shipments, but also to expand into synthetic, plastic, rubber and textile footwear,” she said.

Industry representatives also expect the agreement to strengthen the entire supply chain, support job creation in manufacturing and reduce bureaucratic hurdles in trade procedures.

Abicalçados and other Mercosur industry associations worked closely with their European counterparts during negotiations, Linck said, describing the footwear chapter as well-constructed and balanced.

The agreement is also seen as offering greater predictability for exporters at a time of economic and political uncertainty.

Regional impact and risks

In Franca, for example, 5% of the city’s $64.6 million in footwear exports in 2025 — about $2.7 million — went to the EU. In 2005, exports to the bloc had reached $21.5 million.

Regions with strong leather production, such as Franca and parts of Rio Grande do Sul, are expected to benefit most directly from tariff reductions. At the same time, other manufacturing clusters could gain from expanded opportunities in higher-tariff segments.

The main concern for Brazilian manufacturers relates to rules of origin.

The sector fears that the agreement could be used as a loophole for Asian products to enter Brazil through the EU under preferential terms, a practice known as triangulation.

“What we worry about is Asian products entering Brazil via the EU as if they were European and enjoying tariff exemptions, even though they were not produced in Europe,” Linck said.

To mitigate that risk, the agreement includes origin certification requirements designed to ensure that only goods genuinely produced within the EU qualify for preferential treatment.

“European products tend to complement ours and would not displace domestic production,” she said. “The greater risk lies with third-country products, which is why strict rules of origin were established.”

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