Forget tariff wars: The EU and Mercosur build one of the world's biggest free-trade zones

CAÑUELAS, Argentina (AP) — Talks on a landmark free trade deal between the European Union and four South American countries started so long ago that the euro wasn’t even in circulation, China hadn’t yet joined the World Trade Organization and Venezuela was still America’s top oil provider.

But against a starkly different geopolitical background and tough odds — including backlash from powerful protectionist lobbies — the EU and the South American alliance known as Mercosur are expected to formally sign their quarter-century-in-the-making trade pact this Saturday at a ceremony in Paraguay.

This is the first major trade agreement for Mercosur, which includes the region's two biggest economies, Brazil and Argentina, along with Paraguay and Uruguay. Bolivia, the newest member, was not involved in negotiations but can join the agreement in the coming years.

The trans-Atlantic trade deal — lifting tariffs on products ranging from Argentine steaks and Brazilian copper to German cars and Italian wine — still has to be ratified by the European Parliament.

The significance of creating one of the world's largest free-trade zones — home to more than 700 million people and accounting for a quarter of global gross domestic product — while President Donald Trump yanks the United States out of the international economy is not lost on the signatories.

European Commission President Ursula von der Leyen hailed the deal last week as a powerful endorsement of multilateralism "in the face of an increasingly hostile and transactional world." Brazilian President Luiz Inácio Lula da Silva, 80, called it a rare “victory for dialogue, negotiation and the bet on cooperation.”

That victory comes at the expense of the U.S. and China, experts say, as Trump aggressively asserts American authority in the resource-rich region and Beijing uses its massive trade and loans to build influence.

“It’s a signal that South American economies are seeking to hedge away from this great power competition between the U.S. and China,” said Lee Schlenker, a research associate with the Global South program at the Quincy Institute for Responsible Statecraft, a Washington think tank.

“It shows that South America can continue to flex its muscles in the international sphere, to diversify its trade partners and exert a certain level of autonomy it’s often denied.”

The accord grants South American nations, renowned for their fertile land and skilled farmers, increased access at a preferential tax rate to Europe’s vast market for agricultural goods.

Here in Argentina, exporters reckon they’ll save tens of millions of dollars a year thanks to the deal’s immediate elimination of a 20% tariff on the EU’s long-standing quota scheme for high-quality meat imports.

It’s a breakthrough for Argentina, a nation dominated for decades by left-leaning populist governments that kept the economy closed to the outside world and prioritized the domestic market to the extent of imposing taxes on farm exports to keep food prices down.

“We're in the midst of a paradigm shift here," said Carlos Colombo, the president of Cañuelas Cattle Market in Buenos Aires province where over 12,000 cattle are sold daily, many destined for Europe and China. “Argentina has reopened itself to the world."

Argentine President Javier Milei may be Trump’s strongest ideological ally in Latin America — sharing his disdain for the United Nations and the Paris climate accord — but no one can call the radical libertarian a protectionist.

At first he derided the notoriously slow-moving Mercosur as irrelevant and threatened to ditch it. But he changed his tune since realizing the bloc’s potential to sweep away tariffs and slash customs red tape.

“He sees this agreement as a way to revitalize and re-signify Mercosur,” said Marcelo Elizondo, an Argentine economic analyst specializing in international trade.

The free-trade fever has also infected Brazil's long-closed economy. Apex, a Brazilian government investment agency, estimates that EU-bound agricultural exports like instant coffee, poultry and orange juice will rake in $7 billion in coming years.

Squeezed by environmental regulations and fearing a flood of cheap food products from across the Atlantic, farmers have blocked highways and descended on the streets of European capitals in an explosion of outrage against the agreement.

The EU has scrambled to soothe their concerns over decades of negotiations, adding environmental and animal welfare safeguards to the accord and imposing strict quotas for South American exports of meat and sugar to ensure homegrown produce stays competitive.

Even so, the angry farmers ultimately persuaded France, Poland and a few other states to oppose the deal in last week's internal EU vote, depriving the accord's supporters of what they hoped would be a show of unity. Italy and other agricultural powerhouses only came around after the EU offered farmers generous subsidies to the tune of $52 billion.

“It's a sizable bribe,” said Jacob Funk Kirkegaard, nonresident senior fellow at the Peterson Institute for International Economics. “EU leaders decided that the deal is so important at this moment, it's worth it.”

Some have dubbed the deal “cows for cars," reflecting the perception that Europe's auto industry will also win big.

Clobbered by growing competition with China and sky-high U.S. tariffs, vaunted German auto giants like Volkswagen and BMW are glad for the boost, as are producers in Europe's pharmaceutical, construction and machinery sectors gaining access to hundreds of millions more consumers.

Experts say that the elimination of 35% tariffs on auto parts and cars gives European industrial exporters a rare chance to claw back their South American market share from cheaper Chinese rivals.

“Failing to sign the EU-Mercosur free trade agreement risked pushing Latin American economies closer to Beijing’s orbit,” said Agathe Demarais, a senior policy fellow with the European Council on Foreign Relations.

But many are still are holding their breath, having watched negotiations lumber along for years only to trip up at the last minute.

“There are still several steps that have to be taken ... and Europe continues to be very careful," Colombo said, straining to be heard over the hollers of cowboys prodding hundreds of bellowing cattle into trucks.

“Let's not forget, this is historic. We've never reached an agreement like this before."

Associated Press writer Mauricio Savarese in Sao Paulo contributed to this report.

Farmers drive their tractors past the Arc de Triomphe as they protest the Mercosur trade deal, Tuesday, Jan. 13, 2026 in Paris. (AP Photo/Emma Da Silva)

People protest against the EU-Mercosur trade deal in Athlone, Ireland, Saturday Jan. 10, 2026. (Cillian Sherlock/PA via AP)

A banner with writing in Italian "Mercusur, the tomb of made in Italy" hangs from a truck during a farmers protest against the Mercosur deal, a free trade deal between the European Union and five South American nations, in Milan, Italy, Friday, Jan. 9, 2026. (Claudio Furlan/LaPresse via AP)

Sunflowers stand in a field in Lobos, Argentina, Tuesday, Jan. 13, 2026. (AP Photo/Natacha Pisarenko)

A worker moves cattle at the Agricultural and Livestock Market in Canuelas, Argentina, Tuesday, Jan. 13, 2026. (AP Photo/Natacha Pisarenko)

CAPE CANAVERAL, Fla. (AP) — An ailing astronaut returned to Earth with three others on Thursday, ending their space station mission more than a month early in NASA’s first medical evacuation.

SpaceX guided the capsule to a middle-of-the-night splashdown in the Pacific near San Diego, less than 11 hours after the astronauts exited the International Space Station.

“It’s so good to be home,” said NASA astronaut Zena Cardman, the capsule commander.

It was an unexpected finish to a mission that began in August and left the orbiting lab with only one American and two Russians on board. NASA and SpaceX said they would try to move up the launch of a fresh crew of four; liftoff is currently targeted for mid-February.

Cardman and NASA’s Mike Fincke were joined on the return by Japan’s Kimiya Yui and Russia’s Oleg Platonov. Officials have refused to identify the astronaut who had the health problem or explain what happened, citing medical privacy.

While the astronaut was stable in orbit, NASA wanted them back on Earth as soon as possible to receive proper care and diagnostic testing. The entry and splashdown required no special changes or accommodations, officials said, and the recovery ship had its usual allotment of medical experts on board. It was not immediately known when the astronauts would fly from California to their home base in Houston. Platonov’s return to Moscow was also unclear.

NASA stressed repeatedly over the past week that this was not an emergency. The astronaut fell sick or was injured on Jan. 7, prompting NASA to call off the next day’s spacewalk by Cardman and Fincke, and ultimately resulting in the early return. It was the first time NASA cut short a spaceflight for medical reasons. The Russians had done so decades ago.

The space station has gotten by with three astronauts before, sometimes even with just two. NASA said it will be unable to perform a spacewalk, even for an emergency, until the arrival of the next crew, which has two Americans, one French and one Russian astronaut.

The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Department of Science Education and the Robert Wood Johnson Foundation. The AP is solely responsible for all content.

This screengrab from video provided by NASA TV shows the SpaceX Dragon departing from the International Space Station shortly after undocking with four NASA Crew-11 members inside on Wednesday, Jan. 14, 2026. (NASA via AP)

This photo provided by NASA shows clockwise from bottom left are, NASA astronaut Mike Fincke, Roscosmos cosmonaut Oleg Platonov, NASA astronaut Zena Cardman, and JAXA (Japan Aerospace Exploration Agency) astronaut Kimiya Yui gathering for a crew portrait wearing their Dragon pressure suits during a suit verification check inside the International Space Station’s Kibo laboratory module, Wednesday, Jan. 14, 2026. (NASA via AP)

This screengrab from video provided by NASA shows recovery vessels approaching the NASA's SpaceX Crew-11 capsule to evacuate one of the crew members after they re-entered the earth in a middle-of-the-night splashdown near San Diego, Calif., Thursday, Jan. 15, 2026. (NASA via AP)

This screengrab from video provided by NASA shows the NASA's SpaceX Crew-11 members re entering the earth in a middle-of-the-night splashdown near San Diego, Calif., Thursday, Jan. 15, 2026. (NASA via AP)

This screengrab from video provided by NASA shows the NASA's SpaceX Crew-11 members re entering the earth in a middle-of-the-night splashdown near San Diego, Calif., Thursday, Jan. 15, 2026. (NASA via AP)