Bartender Rafaella Demelo adds sugar, 1.5 ounces of Leblon, and half a lime over ice in a shaker while preparing a caipirinha, Brazil’s trademark cocktail.
Alan Diaz/AP
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Alan Diaz/AP
RIO DE JANEIRO, Brazil — The Trump administration’s tariffs may have achieved something diplomacy couldn’t for years: bringing Europe and South America closer together.
For Brazilian cachaça manufacturers, this diplomatic change is starting to open new business doors.
“I think growth will be immense,” said Assja Schymura, a distiller at Pindorama. “If we can only get over these initial barriers.”
Cachaça, a sugarcane-based liquor and the main ingredient in Brazil’s famous caipirinha cocktail, has won awards in Europe but struggled to gain a foothold in the market due to import taxes and unfamiliarity. Now, producers see a chance to change that.
In May, the European Union and Mercosur—a South American trade bloc that includes Brazil, Argentina, Uruguay, and Paraguay—made progress on a long-awaited trade agreement. This deal aims to reduce tariffs on various goods, including cachaça. Bolivia, which joined Mercosur after the deal was mostly negotiated, is expected to become part of it in the coming years.
The agreement was finally reached after years of delays, largely due to both regions being affected by U.S. tariffs. According to Roberto Jaguaribe, a Brazilian trade official and diplomat, unpredictable relations with the U.S. have prompted the search for new partners.
The EU-Mercosur agreement extends beyond trade, committing members to maintain democratic institutions and adhere to the Paris climate agreement—commitments that officials from both regions say are increasingly important as Washington steps back from global initiatives on climate and democracy under the Trump administration.
This shift in relations has also spurred other discussions. At a recent conference in Brazil focused on strengthening ties between Europe and Latin America, Finnish diplomat Anna-Kaisa Heikkinen emphasized the need for countries committed to a rules-based international order to collaborate more effectively.
Despite a harmonious atmosphere at the conference, some trade disagreements remain between South America and Europe. European lawmakers from agricultural areas express concerns about potential exposure to cheaper imports and have sent the agreement to the EU Court of Justice for review in January. A decision in the next two years might result in changes to the agreement.
Mercosur’s willingness to embrace trade goes beyond the EU deal. Since Trump took office, the bloc has quickly pursued other trade agreements. It signed one with four non-EU European countries last year and is in talks with Canada, Japan, and the United Arab Emirates.
This marks a change for countries like Brazil, which traditionally had high tariffs. Recent challenges, including U.S. trade pressure and pandemic-related shortages, have prompted a reevaluation.
According to Larissa Wachholz, a former Brazilian official, these challenges have sparked “a very important moment of change” in Brazilian trade policy. “I don’t see that going back to hundred percent protectionism,” she noted.
The directors of Pindorama cachaça company see trade openness as offering more than financial gains; it provides an opportunity for people to learn about Brazil.
“People might have an image of Brazil that is restricted to carnival,” says creative director Rafael Daló. However, by learning about their cachaça, he adds, people can discover the unique environment where it is made, bringing out specific aromas and flavors. “It’s another Brazilian story.”
