What are the impacts on the national company most affected by the taxation announced by Trump?

Embraer is the Brazilian company most affected by the 50% tariff on products imported from Brazil announced on Wednesday (9) by the President of the United States, Donald Trump. Analysts point to an impact of approximately US$ 220 million on the company's operating profit, which is equivalent to 35% of the projected for this year.

The biggest concern lies in the high exposure of the manufacturer's aircraft in the United States: around 60% of Embraer's revenue comes from North American companies , both in the commercial and executive segments.

In its first-quarter financial report, Embraer reported that it has 181 commercial aircraft ordered by U.S. companies, either from operators or leasing companies. The order backlog includes:

• American Airlines
• Republic Airlines
• Horizon Air
• SkyWest
• AirCastle
• Azorra

This calculation does not include the 60 aircraft ordered by SkyWest in June during the Paris Air Show , a deal valued at US$3.6 billion. The tariff increase does not directly affect Embraer, but rather the importing companies. If this increase is confirmed, buyers are expected to reduce the rate of aircraft receipts, directly impacting the manufacturer's production in São José dos Campos, São Paulo.

“Tariffs directed at Brazil should reduce the company’s [Embraer] competitiveness in relation to European competitors”

BTG Pactual Analysis

“Although ERJ [Embraer] customers are responsible for the tariff charge, our concern remains with the weaker demand after an inflationary environment for E1s [first generation jets] , with risks of delivery delays if airlines try to avoid such surcharges,” analyzes the XP Investimentos team.

On the other hand, as BTG Pactual points out, the most exported commercial aircraft to the US, the E175 , currently has no replacement in the North American market, which leaves room for price adjustments in negotiations. Furthermore, the bank notes that "the 10% increase announced in April was not enough to curb demand, as evidenced by SkyWest 's recent order."

In the case of 50%, it is a “much greater challenge”, not to mention that the “tariffs directed at Brazil should reduce the competitiveness of the company [Embraer] in relation to European competitors”, continues the BTG Pactual document, referring mainly to Airbus, which produces the A220 , a competitor of the Brazilian manufacturer's second-generation aircraft, the E2s .

Impact expected to be minor on Embraer executive jets

Approximately 75% of Embraer's executive jet sales are to customers in the United States. However, the production dynamics of these aircraft tend to lessen the impact of some of these sales on the Brazilian manufacturer's sales to the North American market.

The best-selling executive jet is the Phenom family, with two models (the Phenom 100 and the Phenom 300). Last year alone, 75 aircraft were delivered to customers worldwide. These jets are assembled at Embraer's Florida facility, with approximately 40% of the aircraft produced in Brazil and shipped to the final production line in the US.

In contrast, the Praetor line—55 were delivered last year—has a different production dynamic, being assembled at the Gavião Peixoto plant in the interior of São Paulo. Part of the aircraft's finalization is done in Florida before delivery to customers. And despite the smaller number of aircraft produced, the Praetor family is the most economically significant: 65% of the executive segment's revenue comes from these aircraft.

In a statement, Embraer said that it "is evaluating the possible impacts on its business of the possibility of a tariff increase announced yesterday by the US government on Brazilian products, if the decree applies to the aviation industry in Brazil" and that it "is working with the competent authorities to reestablish the zero rate of import taxes for the aeronautical sector."