EU–Mercosur trade deal could quietly reshape textile and apparel markets

Beyond headlines about geopolitics and agriculture, the EU–Mercosur trade agreement is set to alter competitive dynamics in the global textile and apparel sector, with implications for sourcing, sustainability strategies and circular business models.

Following the political agreement between the EU and Mercosur countries Brazil, Argentina, Uruguay and Paraguay, textile and apparel actors are beginning to assess how the deal may affect global markets.

The agreement will gradually remove tariffs on more than 90 percent of bilateral trade, with textiles and apparel among the sectors expected to benefit most. Industry association EURATEX has described the deal as a “strategic diversification lever”, particularly for exporters of sustainable, circular and industrial textiles.

Analysts suggest the agreement could rebalance trade flows by strengthening South American suppliers while increasing competitive pressure on Asian exporters. Rather than cost alone, trade diplomacy, regional integration and supply-chain resilience are likely to play a growing role in sourcing decisions.

For European brands, the deal may also intersect with circular economy ambitions. Easier access to Mercosur markets could influence material sourcing strategies, production footprints and long-term investment decisions at a time when regulatory pressure on textiles is intensifying within the EU.