UPDATE 2-Brazil cuts import tariffs by 10% amid talk of Mercosur reduction

(Recasts with Brazil tariff reduction)

BRASILIA, Nov 5 (Reuters) - Brazil's government announced on Friday a 10% reduction to import tariffs on 87% of goods and services, jumping ahead of an expected move by South American trade bloc Mercosur.

The reduction will last until the end of 2022, according to a joint statement by the Economy Ministry and Foreign Ministry, adding that it was an exceptional move within Mercosur rules.

Earlier on Friday, Economy Minister Paulo Guedes said he expected Mercosur to announce the same reduction for the group's common external tariff in the next few days. Brazil's preemptive move may add pressure on other Mercorsur members to follow suit.

"Brazil remains fully engaged in the ongoing negotiations in Mercosur," the statement said, adding that the 10% reduction "follows the parameters already agreed with some of the Mercosur partners in the negotiations" around the common external tariff.

Members of Mercosur, a common market formed by Argentina, Brazil, Paraguay and Uruguay, have for years discussed a tariff reduction to help increase trade between them and the rest of the world.

Last month, Argentina and Brazil agreed https://www.reuters.com/world/americas/brazil-argentina-agree-framework-lower-mercosur-tariffs-2021-10-08 on a framework to reduce the tariff.

Inflation in Brazil has climbed into double digits this year, driven in part by a weaker currency pushing up the cost of imports, creating a political headache for President Jair Bolsonaro ahead of next year's election.

In a statement, Brazil's government said the tariff reduction had been made under a Mercosur provision allowing for "the possibility of adopting measures aimed at protecting people's lives and health."

The impact of the COVID-19 pandemic had made the move necessary, the government said. (Reporting by Marcela Ayres and Stephen Eisenhammer Editing by Brad Haynes and Alistair Bell)