Mexico, Brazil to Eliminate Tariffs on Heavy Vehicle Trade

Starting on July 1, 2023, Mexico and Brazil will eliminate tariffs on heavy-vehicle trade, as part of the Economic Complementation Agreement No. 55 (ACE 55) between the two countries. This agreement covers tractors, trucks, buses and certain chassis.

In 2019, Mexico and Brazil established a free-trade agreement focused on light vehicles and on building an open relationship in the exchange of auto parts. At Brazil’s request, the tariff reduction for heavy-duty vehicles was postponed from 2020 to 2023. In this regard, the following tariff reduction schedule was negotiated between the two countries: 20% from 2020 to 2021, 40% between 2021 and 2022, 70% from 2022 to 2023 and 100% as of July 1, 2023. 

According to data from the Brazilian Ministry of Economy, Mexican exports to Brazil reached US$231 million in 2022, while Brazil’s exports to Mexico rose to US$683 million. Regarding the bilateral trade of vehicles for the transport of goods, Mexico’s exports were estimated at US$306 million and Brazil’s at US$294 million. 

At a global scale, Brazil’s automotive imports fell from US$9.8 billion in 2012 to US$3.62 billion in 2022. On the other hand, exports totaled US$4.6 billion. Meanwhile, Mexican exports reached US$39.9 billion. Mexico ranks as the third external supplier of light cars in the Brazilian market and it is the third main importer of Brazilian vehicles.

To this day, neither Mexico nor Brazil have exported tractors as part of the bilateral trade agreement. In 2022, Brazil’s external purchases for this type of vehicles stood at US$348 million, of which US$98 million originated in the US. Likewise, trade in buses or chassis included in the new opening between these two economies is marginal.

Mexico’s main export products to Brazil include auto parts, computers, vehicles for the transport of goods and automobiles. In 2022, exports to the South American country equaled US$4.5 billion. Furthermore, during the same period, Brazil exported cars, semi-finished steel products, corn, soybeans and poultry to the Mexican market, reaching gains of US$12.1 billion.