The centre of gravity in global affairs has been shifting to geoeconomics, with trade policy increasingly influenced by security concerns, industrial strategies, and strategic rivalry. Fragmentation, unilateral measures, and pressures on established rules have strained the multilateral trading system. Yet this same context has created room for middle powers to act as bridge-builders, coalition partners, and pragmatic defenders of rules-based trade. While geoeconomic fragmentation poses significant challenges, it may create opportunities for middle powers to exercise greater agency.
Brazil’s trajectory is a good illustration of this dual dynamic in which rising frictions and competition also create incentives for cooperation. Even as geopolitical tensions rise, the country has advanced a series of trade agreements and deepened engagement with partners across regions. What may appear as a paradox – greater fragmentation alongside renewed integration – is in fact a strategic deliberative pivot towards diversification, predictability and legal certainty. Agreements that took decades to negotiate are now moving forward, suggesting that economic cooperation remains both viable and necessary.
‘Brazil had to manage frictions related to the EU’s sustainability framework.’
At the centre of this strategy is the Mercosur–European Union Agreement, provisionally in force since 1 May 2026. It exemplifies Brazil’s middle-power diplomacy, connecting two regions with shared values and long-term interests while sending a clear signal in favour of openness and predictability. Its swift ratification by the congresses of Brazil, Argentina, Paraguay, and Uruguay – completed in less than three months – also points to broad political support, a momentum likely sharpened by the current geopolitical climate.
In advancing the Mercosur-EU Agreement, Brazil also had to manage frictions related to the EU’s evolving sustainability framework, particularly the EU Deforestation Regulation. While Mercosur countries expressed concerns regarding the measure’s sustainability benefits, trade impact and consistency with WTO principles, the negotiations moved forward through pragmatic engagement and dialogue. The final agreement preserves regulatory autonomy on both sides while incorporating mechanisms aimed at safeguarding the balance of negotiated concessions and ensuring greater predictability for exporters.
This agreement is part of a broader expansion of Brazil’s trade network. In April 2026, two additional agreements were submitted to Congress, Mercosur-EFTA and Mercosur-Singapore. Together, these initiatives increase the share of Brazilian exports covered by trade preferences from around 12 per cent to 31 per cent, marking the most significant expansion of the country’s trade agreements to date. Additionally, negotiations with partners such as Canada have regained pace, reflecting a growing global urge for stable, rules-based partnerships amidst systemic instability.
‘Brazil’s response to the tariffs illustrates the balancing act faced by middle powers.’
Brazil’s response to the 2025 wave of unilateral tariff measures, notably the 50 per cent US tariffs impacting one-third of shipments, illustrates the balancing act faced by middle powers. Brazil has emphasised dialogue and mutually beneficial solutions, while underscoring that engagement must be based on respect and the preservation of national interests. This year’s report confirms that expert perceptions have shifted: key partners remain important, but their role is increasingly seen through the lens of risk and uncertainty, reinforcing the importance of diversification.
Despite these pressures, Brazil’s trade performance has remained robust. Record export and import levels in 2025, alongside a record number of exporting firms, point to a diversified international footprint that provides a natural buffer for Brazil against bilateral disputes.
Brazil has also remained actively engaged in discussions on the reform of global trade governance. Its position reflects a dual-track approach: advancing bilateral and plurilateral agreements while supporting a stronger multilateral system. There is broad backing for a stronger WTO, alongside continued engagement in trade negotiations. This is not a choice between paths, but a combination of both.
By hosting COP30 and chairing BRICS in 2025, Brazil has placed itself at the centre of discussions on sustainability, development, and economic cooperation. In a more fragmented and uncertain world, Brazil’s approach remains anchored in openness and flexibility. The country is not willing to take sides and is actively engaged in preserving the conditions that make non-automatic alignment viable. By maintaining relations with a wide range of partners and investing in a diversified network of agreements and forums, Brazil strengthens its resilience and expands its room for manoeuvre. In doing so, it illustrates how middle powers can remain central to adaptation of the international trading system.
Tatiana Prazeres is the Foreign Trade Secretary for the Brazilian Ministry of Development, Industry, Trade and Services.
This chapter is extracted from the 2026 Emerging Middle Powers Report. You can download the report here.