EU Trade Deals on Hold: What the EU–US and Mercosur Delays Signal for Chemicals and Plastics

The European Parliament’s decision to put both the EU–US and EU–Mercosur trade deals on ice marks another moment of strategic uncertainty for global trade with real consequences for chemicals, plastics, and energy-intensive industries.

The EU–US agreement, already criticized for favoring Washington, is now “on hold until further notice” following political tensions triggered by President Trump’s remarks on Greenland and tariff threats. Even after Trump walked those threats back, EU lawmakers signaled little appetite to move forward. For European industry, this pause offers short-term relief: the deal would have locked in US tariff advantages while granting zero-tariff access for US industrial goods, including plastics (Chapter 39) and organic chemicals (Chapter 29), at a time when EU producers are already warning about eroding competitiveness.

At the same time, the EU–Mercosur agreement faces a potentially two-year judicial review at the European Court of Justice. While the Commission sees the deal as strategically vital to diversifying trade partners, opposition remains strong, from agricultural interests, environmental groups, and parts of Parliament concerned about deforestation and imports produced under looser regulatory standards. Industry groups, particularly in chemicals, have been blunt in their criticism, calling the delay an act of “self-blockade” as other regions pursue their interests more aggressively.

Taken together, these developments reinforce a broader pattern: trade policy is increasingly shaped by geopolitics, domestic pressure, and industrial anxiety rather than pure market logic. That tension is especially relevant for Latin America and Brazil, where access to EU markets intersects with energy, chemicals, and plastics value chains, a dynamic we explored earlier in the context of US petrochemical investments in Venezuela and their implications for Brazil:
https://townsendsolutions.com/news/u-s-petrochemical-investments-in-venezuela-implications-for-brazil

For now, Europe’s trade partners and its own industrial base, are left waiting.

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