Crédit Mutuel Asset Management is an asset‑management company of Groupe La Française, the holding company for the asset management division of Crédit Mutuel Alliance Fédérale.
In the context of the tariff war launched by the United States, its trading partners are diversifying their alliances to shield themselves from American threats. As a result, two historic trade agreements have just been signed by the European Union (EU): one with Mercosur, and the other with India. As they are implemented, each agreement is expected to generate around +0.1% annual growth over a 5 to 10‑year period[1], with a potentially significant impact on the equity asset class for certain players and sectors.
Mercosur at a glance
Signed on January 17, the trade agreement with Mercosur (EU & Argentina, Brazil, Paraguay, Uruguay and Bolivia to follow later) will enter into provisional application pending ratification. The treaty provides for the lifting of customs duties, currently between 15% and 35%, on 90% of products over a period of ten to fifteen years[2]. For some products, tariffs will be eliminated immediately; for others, reductions will take place gradually over different timeframes (4, 7, 8, 10, or 12 years). Significant restrictions have been introduced for the agricultural sector to avoid destabilizing the European market.
The Mercosur agreement covers a total population of 718 million people and two geographic blocs representing 20% of global GDP[3]. The European Commission estimates that the agreement will reduce customs duties paid by European exporters by around €4 billion. EU exports to Mercosur countries are expected to rise by 39% over the period. Overall, the deal should generate +0.1% annual growth for the EU and +0.3% for Mercosur[4].
Spain and Portugal are expected to benefit the most: 4% and 7% of their trade respectively is with Mercosur, compared with 2% for Germany and 1% for France. Germany should gain primarily through its automotive sector. For France, the agreement should be positive for wines and spirits. On the Latin American side, Brazil is likely to be the main winner thanks to increased exports of coffee, sugar and oil[5].
“Mother of All Deals”
After 20 years of negotiations, the “Mother of All Deals” between the EU and India is taking shape; together, the two areas represent 25% of global GDP. The agreement aims to eliminate tariffs on 92% to 97% of goods and services, in principle over 5 years[6]. Immediate gains from reduced tariffs are estimated at €4 billion, and the overall macroeconomic impact is expected to be similar to that of the Mercosur agreement, around +0.1% growth for the EU.
For example, the treaty plans to reduce automobile tariffs (excluding electric vehicles) from 110% to as low as 10% for certain models, up to a quota of 250,000 vehicles. Beyond that quota, tariffs rise from 10% to 35%. For wines and spirits, tariffs fall from 150% to 75% and then to 20%. Tariffs on chemicals, pharmaceuticals and machine tools drop to 0%[7]. Significant tariff reductions are also planned for agricultural products on both sides. As with the Mercosur agreement, safeguard clauses apply to meat, rice and sugar.
For India, the EU is already its largest trading partner, with $76 billion in exports and $61 billion in imports, representing nearly 12% of Indian exports[8]. According to the International Trade Centre (ITC), these trade flows could double within five years, strengthening economic integration between the two blocs. Beyond expected gains in the goods sector (notably textiles, electronics, and pharmaceuticals), the greatest potential lies in services. Despite the recent decision by the Trump administration to lower tariffs on Indian exports from 50% to 18%, the EU is emerging as a strategic outlet, especially since the types of goods and services exported to both markets are similar. India’s growth potential is therefore significant.
For the EU, the treaty opens access to a largely untapped market: India currently accounts for only 0.8% of EU exports[9]. Countries best positioned to benefit, thanks to the export of cars, industrial machinery and defense equipment, include France, Belgium, Germany, Finland and Italy[10]. Germany stands out as the largest potential winner, already India’s leading European partner in sectors such as aeronautics, scientific instruments, automotive, and pharmaceuticals.
Completed 17/02/2026. This commentary is provided for information purposes only. The opinions expressed by Crédit Mutuel Asset Management are based on current market conditions and are subject to change without notice. These opinions may differ from those of other investment professionals. Published by La Française Finance Services, head office located at 128 boulevard Raspail, 75006 Paris, France, a company regulated by the Autorité de Contrôle Prudentiel as an investment services provider, no. 18673 X, a subsidiary of La Française. Crédit Mutuel Asset Management: 128 Boulevard Raspail, 75006 Paris is an asset management company approved by the Autorité des marchés financiers under n° GP 97 138 and registered with ORIAS (www.orias.fr) under no. 25003045 since 11/04/2025. Public Limited Company (Société Anonyme) with share capital of €3,871,680, RCS Paris n° 388 555 021, Crédit Mutuel Asset Management is a subsidiary of Groupe La Française, the asset management holding company of Crédit Mutuel Alliance Fédérale.
[1] Source: La Commission Européenne
[2] Source: La Commission Européenne
[3] Source: UN, IMF, « GDP and population », 2024
[4] Source: La Commission Européenne
[5] Source: IMF, Mercosur’s trade with key partners, 2024
[6] Source: La Commission Européenne
[7] Source: La Commission Européenne
[8] Source: IMF
[9] Source: IMF
[10] Source: ITC trademap, 2024
