Paraguay: Trade Partnerships

Paraguay's economy has long been organized around agricultural exports and hydroelectric power rather than manufacturing, a legacy of its landlocked geography and reliance on the Paraguay and Paraná Rivers for access to Atlantic shipping lanes. The country became a major global soybean exporter beginning in the 2000s, while the binational Itaipú and Yacyretá hydroelectric dams, shared with Brazil and Argentina respectively, generate far more electricity than Paraguay itself consumes, making it one of the world's largest net electricity exporters.

Paraguay's trade partnerships are shaped heavily by its membership in the Southern Common Market (Mercosur). As of 2026, Brazil remains Paraguay's leading export destination, followed by Argentina and other South American markets, while China supplies the largest share of Paraguay's imports, ahead of Brazil and Argentina. Soybeans, meat, corn, and hydroelectric power remain the country's dominant exports, and Paraguay ranks among the world's largest exporters of both soy and renewable electricity.

Paraguay's most significant recent trade development is the European Union-Mercosur trade agreement, which began provisional application on May 1, 2026, after European Union member states formally endorsed it in January 2026; the deal creates a combined market of roughly 700 million people and phases in tariff reductions on industrial and agricultural goods, pending final consent from the European Parliament. Paraguay has no separate bilateral free trade agreement with the United States or China, relying instead on its Mercosur membership to negotiate external trade terms collectively.