The European Union and Mercosur are expected to finalize a revised free-trade agreement this week, according to reporting from Reuters. The deal has been under negotiation for years and would link the EU with a South American bloc that includes Brazil, Argentina, Paraguay and Uruguay.

The agreement comes as governments and companies look for ways to reduce exposure to rising U.S. tariffs and to diversify supply chains away from Asia. Supporters say the pact could open new markets for exporters on both sides, while also helping firms adjust to a more fragmented global trade environment.

Officials have also been working to update terms of the long-delayed accord to reflect changing political and economic conditions. If completed, the deal would mark a significant step for EU trade policy and could influence how major economies position themselves in an era of strained global commerce.

Even so, final approval is not automatic. The agreement still faces political scrutiny in Europe and among Mercosur members, where concerns over agriculture, environmental standards and market access have repeatedly slowed progress.