Brazilian aerospace manufacturer Embraer was one of the most exposed companies to the 50% tariffs announced by US President Donald Trump.
Given that more than 60% of its sales come from the US market, the commercial and operational impact of these tariffs alone is significant.
Brazil’s Embraer exports its E1 commercial aircraft models to North American airlines and assembles and completes its executive jets in the state, including its Praetor and Phenom lines.
This almost sole dependence on the US means any eventual tariff on Brazilian imports could have implications for production costs and demand moving forward.
According to XP Investimentos analysts, Embraer does not find ‘total protection’ in its US operating structure from import tariffs.
Though the jets are assembled in Florida, the bulk of the jets’ value comes from Brazil—roughly 55-60% for Praetors and 35-40% for Phenoms, thus subjecting them to the tariff when their components cross the border.
Cost impact could cut earnings by more than half
According to XP Investimentos, every 10 percentage point increase in tariffs might reduce Embraer’s 2026 EBIT (Earnings Before Interest and Taxes) by approximately US$95 million.
If the full 50% tariff is applied, earnings are expected to fall by 55-60% in 2026. This estimate takes into account the additional expenditures Embraer would incur as the record importer for its Brazilian-manufactured jets.
The commercial aviation industry also faces hazards, albeit of a different kind. While US airlines are technically obligated to pay tariffs, the rising cost environment may reduce demand.
Delays in deliveries may occur as purchasers rethink or postpone purchases to avoid fees. While pre-delivery payments and contractual restrictions help to offset some risks, XP adds that market perception may still have an impact on Embraer’s performance.
Despite such risks, XP maintains a neutral recommendation on Embraer, noting concerns about the tariff’s long-term enforcement and the company’s ability to adapt to a changing environment.
However, the business warns that if tariffs remain higher than expected, consensus earnings predictions may need to be revised lower.
Market concern rises despite mitigation efforts
Bradesco BBI notes Embraer as the name most exposed to the US in its Brazil-listed coverage, echoing XP. Assuming the tariff is imposed in August, the firm estimates a US$220 million hit to 2025 EBIT, approximately 35% of its estimate for the full year.
This forecast only accounts for the second half of the year, due to the timing of implementation, as specified in official documents.
Even where some of Embraer’s executive jets are assembled or otherwise built in the US, this coverage is also partial and may limit exposure.
For example, all Phenom jets are constructed in the United States, whereas Praetors are only partially assembled there. According to local news media outlet InfoMoney, analysts believe this can reduce, but not eliminate, tariff impacts.
BBI warfare also suggests three potential mitigation measures: increasing jet costs on future orders, raising service and parts prices, and leveraging contractual safeguards in the commercial space.
However, these measures will not fully compensate for the impact on public budgets in the medium term.
According to UBS BB, each 10% tariff increase could cut Embraer’s business jet profits by 13% while increasing expenditures by around US$70 million.
Their study implies that 40% of Phenom and 60% of Praetor jets will be affected, and that three-quarters of Embraer’s business jet sales are made to US clients.
With political turbulence clouding Brazil-US trade relations, Embraer’s future earnings may be more dependent on geopolitics than engineering excellence.
The coming months may be critical in determining whether the aircraft manufacturer’s soaring stock performance remains airborne, or encounters unexpected turbulence.
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