BRASILIA, June 15, 2025 (Reuters) — Brazil's Industry Ministry announced Wednesday it would impose retaliatory tariffs of 14% to 18% on imported Argentine auto parts, a response to President Javier Milei's decision last week to impose duties on Brazilian vehicle imports.
The measures, which take effect August 1, target roughly $780 million in annual trade and represent Brasilia's most forceful response yet to Milei's broader tariff offensive. Brazilian Industry Minister Geraldo Alckmin called Argentina's initial levies "a unilateral breach of trust" during a press conference in Sao Paulo.
"We spent twenty years building an automotive architecture that benefited both countries," Alckmin said. "Argentina cannot expect to protect its own market while freely accessing ours."
The dispute centers on a deepening asymmetry in automotive trade. Brazil exported 187,000 vehicles to Argentina in 2024, worth approximately $3.2 billion. Argentina shipped just 23,000 vehicles northward, a thirteen-to-one ratio that has fueled political resentment in Buenos Aires.
Milei's government imposed a 35% tariff on Brazilian vehicle imports on June 8, arguing that the current arrangement amounted to "deindustrialization by treaty." Economy Minister Luis Caputo told lawmakers the duties would remain until Argentine automakers regained what he called "a commercially viable share" of the bilateral market.
The Argentine auto manufacturers association, ADEFA, warned that retaliatory tariffs from Brazil would raise production costs for Argentine factories that rely heavily on imported Brazilian components. Industry analysts note that roughly half the parts in a domestically assembled vehicle cross the border at least twice before final assembly, meaning tariffs at both ends effectively tax Argentine production twice.
The automotive sector has served as the economic anchor of Mercosur since the bloc's founding in 1991. A separate auto-specific trade agreement has governed bilateral exchange since 2005, establishing common external tariffs and local content requirements aimed at creating an integrated regional supply chain.
Auto sector employment in Argentina fell from 72,000 workers in 2017 to roughly 41,000 today, according to industry data. The decline accelerated during the 2018-2023 period as Argentine production collapsed and Brazilian imports filled the gap.
Mercosur itself faces an existential test. The bloc has struggled to finalize a trade agreement with the European Union since 2019, and internal disputes have stalled negotiations with other partners.
Brazilian President Luiz Inacio Lula da Silva said he would raise the dispute at the Mercosur summit scheduled for August 15 in Asuncion. Paraguayan officials have pressed both sides to freeze tariff implementations until heads of state can negotiate directly, but neither government has committed to a pause.
Industry estimates suggest the combined tariffs could add $3,000 to $5,000 to the price of entry-level vehicles assembled with Brazilian components.
