2 Billion New Customers: The EU’s New Trade Agreements Are Reshaping the Global Landscape for Danish SMEs

January 2026 marks a historic turning point for Danish exports. With the newly signed free trade agreement with India—dubbed by the European Commission “the mother of all trade agreements”—as well as the Mercosur agreement in South America, Danish companies will now gain access to more than 2 billion consumers. However, these vast opportunities require a financial engine room capable of handling everything from everyday euro payments to exotic currencies in distant high-growth regions.

It is not every day that the global trade landscape shifts so fundamentally all at once. While the India agreement has just been politically concluded and covers one in five consumers worldwide, the Mercosur agreement with Brazil, Argentina, Uruguay, and Paraguay is progressing steadily, with final legal fine-tuning currently underway in Brussels.

Diversification as a strategic necessity

For Danish business leaders, the message is clear: strategic diversification is no longer just a buzzword—it is a necessity. By spreading exports across these new growth markets, companies can reduce their dependence on traditional markets such as the United States and China, which have become increasingly unpredictable and shaped by political tensions.

The need to identify new paths to growth is significant for most businesses. And although recent threats of punitive tariffs from the United States have been averted, the uncertainty has left many Danish exporters with a growing awareness that reliance on a few individual markets must be better balanced. At the same time, many executives recognize that South America, Africa, and Southeast Asia are emerging as promising growth regions, providing companies with additional pillars of stability and opportunity.

India: The breakthrough to the World’s fastest-growing economy

The agreement with India stands in a category of its own. India is currently the world’s fastest-growing major economy, and the deal removes or reduces tariffs on more than 96.6% of all product categories. This dismantles tariff barriers worth over DKK 30 billion annually and opens doors that were previously firmly closed.

For Danish companies, the agreement provides a significant boost:

• Automotive industry and components: One of the world’s most protected markets is now opening up, with tariffs on cars gradually falling from 110% to just 10%.

• Industry and machinery: Tariffs on machinery—currently as high as 44%—will be largely eliminated.

• Chemicals and consumer goods: Processed foods and chemicals, which today face tariff barriers of 20–50%, will gain far easier access to India’s increasingly affluent middle class.

Although the agreement has now been politically concluded, the formal signing is still pending, as the text undergoes its final legal review—a process that typically takes five to six months before ratification can begin.

Mercosur: A growing danish position of strength

While India represents the new great hope, the Mercosur countries (Brazil, Argentina, Uruguay, and Paraguay) are a region where Denmark already has a strong foothold. The numbers speak for themselves:

• Already underway: Nearly 1,000 Danish companies (965 to be exact) are already exporting goods to the region today, totaling approximately DKK 12.7 billion.

• A market for SMEs: As many as 78% of these companies are small or medium-sized enterprises, highlighting that the region is accessible to more than just the largest corporations.

• A Danish footprint: Exports currently support 7,400 jobs directly in Denmark across industries such as pharmaceuticals, wind turbines, machinery, and green technology.

The potential going forward, however, is far greater. Mercosur is currently one of the world’s most closed markets, where high tariffs serve as an effective barrier to Danish goods and services. Once the free trade agreement becomes a reality, tariffs on more than 91% of the EU’s exported goods will gradually be eliminated. This means, for example, that Danish dairy products—currently constrained by a 28% tariff—will be able to compete on equal terms with local producers.

For Danish companies, this represents a significant boost:

• Industry and machinery: Tariffs of up to 20% on machinery are expected to fall to 0%, which could prove decisive in winning contracts in Brazil or Argentina.

• Pharmaceuticals: Companies currently face a 14% tariff, which will be removed entirely.

• Food products: Danish dairy goods, subject to a 28% tariff today, will gain much easier access to the market.

A financial engine room for the entire world

New markets mean new currencies—and therefore new risks. To ensure that success on paper translates into profit in the account, companies need a setup capable of handling everything from Indian Rupees (INR) to Brazilian Reais (BRL).

At kompasbank, we help SMEs prepare for the future of global trade, but our solutions create value already today:

• Everyday efficiency: We optimize your current euro and US dollar setup to eliminate unnecessary “gambling” and manual processes.

• Exotic opportunities: We support a wide range of currencies across Asia and Africa, enabling you to trade faster and more securely right now.

• Lock in your profit margins: With forward exchange contracts, you can fix the exchange rate for future transactions and protect your bottom line, regardless of market fluctuations.

Although the European Court of Justice will be reviewing the agreement in the coming months, preparations should not stand still. The key is to reduce uncertainty and streamline financial processes with the right tools, so you are ready to act proactively when tariff barriers come down.

If you would like to learn more about how kompasbank can help strengthen your currency management and prepare your business for new markets and currencies, you can book a no-obligation conversation with one of our FX experts here.

Sources

EU–India Trade Agreement and Factsheet

EU and Mercosur Sign Historic and Ambitious Partnership Agreement and Denmark Factsheet

The Mercosur Agreement Is Sent to the European Court of Justice