The New Trade Map - EU-Mercosur: Europe’s Hedge Against America. Thursday's Edition

The trade map America isn’t on - Seires 14 #4

Three of the largest trade blocs in the world exclude the U.S: Asia’s RCEP, the Asia-Pacific CPTPP, and the European-South America EU-Mercosur. We covered the first two. Today, we look atthe EU-Mercosur, signed just days ago, and very much driven by the Trump-Republican disaster in the U.S.

EU-Mercosur negotiations began in 1999. For twenty-five years, the deal stalled. French farmers feared cheap Brazilian beef would destroy their livelihoods. Environmentalists warned that boosting agricultural exports would accelerate Amazon deforestation. Brazil’s government changed hands repeatedly, alternating between leaders who wanted the deal and leaders who did not. An agreement in principle emerged in 2019, then sat unsigned for five more years.

Then Trump returned to office and turned on both Europe and South America.

By summer 2025, Trump had imposed tariffs on European goods and made clear that more would follow. In July, he signed a trade deal with von der Leyen, capping tariffs at 15%. Six months later, he threatened to tear it up over Greenland. Businesses cannot operate this way. A German automaker watching this cannot build a factory based on tariff rates that might double by tweet tomorrow morning. A French winemaker cannot price contracts for American buyers when a 200% tariff might arrive because the president dislikes Emmanuel Macron.

The EU responded by signing deals elsewhere. Agreements with Indonesia and Mexico closed in 2025. Talks with India accelerated. The CPTPP opened formal dialogues with Brussels. And von der Leyen pushed to close the Mercosur deal before the year’s end, delaying just long enough to secure Italian support with additional farmer protections, then scheduling the signing for January 17, 2026.

Hours before the ceremony in Asunción, Paraguay, Trump announced 10% tariffs on eight European countries, rising to 25% by June, unless they let America purchase Greenland. Von der Leyen signed, declaring: “We choose fair trade over tariffs. We choose a productive long-term partnership over isolation.”

Hofstede’s research calls this uncertainty avoidance. Nations and companies need high uncertainty avoidance, that is, predictability and stability, to function. They need detailed contracts, clear procedures, and the ability to plan years ahead. When a German manufacturer commits to a ten-year supply chain, they need to know what tariffs they will pay in year ten; EU-Mercosur provides that, America under Trump does not. The EU-Mercosur agreement’s tariff elimination schedules run for fifteen years. Trump changes his mind daily. Under EU-Mercosur, a company can predictably model costs, set prices, and sign contracts.

In Hornby’s framework, the EU operates as Blue and West archetypes combined. Blue is the Guardian who maintains standards, enforces rules, and insists on proper procedure. West is the Sage who builds systematically on established knowledge and verifies before accepting. Twenty-five years of negotiation, additional protocols on labor and environment, safeguard clauses for farmers, and insistence that Mercosur countries recommit to Paris climate targets: Blue and West, working methodically toward a durable structure.

Europe is cutting ties with America because when your largest trading partner governs by impulse, you must have alternatives. EU-Mercosur covers 780 million consumers and 30% of global GDP. It will not vanish because someone posted on Truth Social.

Tomorrow: China’s export pivot to the Global South.

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