Embraer Warns US Tariffs on Brazil Could Delay Orders, Add Costs

Embraer is preparing for potential delays and cancellations of aircraft orders if the United States imposes punitive tariffs on Brazil, CEO Francisco Gomes said during the Association of Southeast Asian Nations (ASEAN) summit in Malaysia.

“We do not have any cancellation issues at this point in time, but mid-term, this might happen. If we make fewer aircraft, we buy fewer equipment from the United States. That is why zero tariffs are important,” Gomes Neto told Bloomberg Television. He added that such tariffs would negatively affect US industry as well.

The executive estimated that US tariffs could add about US$2 million to the cost of each aircraft. Embraer still faces a tariff impact of roughly US$80 million this year, approximately equal to its Q2 net income. Currently, certain products and parts from the manufacturer are included among exemptions from higher US tariffs imposed on Brazil.

Brazilian President Luiz Lula da Silva aims to meet with US President Donald Trump in Malaysia to negotiate a reduction of punitive duties from 50% to 10%. 

Despite tariff uncertainties, Embraer’s order backlog remains at around US$31 billion, the highest level the company has seen in nine years. Gomes Neto said the company continues to pursue strategic investments in the United States. A US$500 million plan for a new assembly line could create 2,500 jobs if the US government selects Embraer’s KC-390 military aircraft. The company also plans to invest another US$500 million in plants over the next five years.