Embraer Evaluates Impact of US Tariffs on Business

Embraer, a Brazilian aeronautic manufacturer, is evaluating the potential impact of US tariffs on its business. The company's net sales are broken down into commercial aircrafts (46.5%), defense systems (31.4%), business aircrafts (21.8%), and other (0.5%). Geographically, sales are distributed across Brazil (12.5%), South America (0.9%), North America (57.2%), Asia/Pacific (14.6%), Europe (11.9%), and other (2.9%).

Embraer, a Brazilian aeronautic manufacturer, is evaluating the potential impact of US tariffs on its business. The company's net sales are broken down into commercial aircrafts (46.5%), defense systems (31.4%), business aircrafts (21.8%), and other (0.5%). Geographically, sales are distributed across Brazil (12.5%), South America (0.9%), North America (57.2%), Asia/Pacific (14.6%), Europe (11.9%), and other (2.9%).

Shares of Embraer fell sharply on Thursday after U.S. President Donald Trump announced a 50% tariff on all imports from Brazil [1]. Analysts warned that Embraer, the world's third-largest aircraft manufacturer, would be one of the firms most affected by the tariffs. Embraer's E1 jets are the backbone of U.S. regional aviation, with SkyWest having recently placed a firm order for 60 E175 aircraft. Demand has also been strong for its business jets in the country, where it has assembly lines. Itau BBA analysts estimated a potential impact of $150 million to Embraer's earnings before interest and taxes (EBIT) from August to December [1].

A 50% tariff on Brazilian goods could significantly impact Embraer's revenue, especially given that 60% of its revenues come from North America, of which three-quarters could be exposed to tariffs [1]. Aircraft are among the top U.S. imports from Brazil, along with oil, steel products, coffee, and orange juice. "Although we see Trump's announcement primarily as a bargaining leverage, we expect investors' concern to remain high given the significant potential impact that a 50% import tariff on Brazilian goods would imply for Embraer," XP analysts said [1].

Morgan Stanley has reiterated an Overweight rating and $65.00 price target on Embraer, despite the tariff impact. The investment bank estimates that if the 50% tariff takes effect, Embraer could face an annualized impact of $300-400 million on EBIT [2]. Despite the negative tariff news, Morgan Stanley views any pullback in Embraer’s stock price as "an attractive buying opportunity," noting that the company’s opportunities extend beyond the US market into product lines that are insulated from tariff risks [2].

Embraer delivered 61 aircraft in the second quarter of 2025, marking a 30% increase compared to the same period last year [3]. Deliveries in Commercial Aviation maintained the same volume as in 2Q24, while deliveries in Executive Aviation reached 38 aircraft, surpassing the number from a year ago by 41% [3]. The company also delivered 4 A-29 Super Tucano aircraft in the Defense & Security segment. Embraer's deliveries estimates for the year are between 77 and 85 in Commercial Aviation and 145 to 155 jets in Executive Aviation [3].

References:
[1] https://finance.yahoo.com/news/shares-brazils-embraer-slide-analysts-163903164.html
[2] https://www.investing.com/news/analyst-ratings/morgan-stanley-maintains-embraer-stock-rating-despite-us-tariff-impact-93CH-4130337
[3] https://www.marketscreener.com/quote/stock/EMBRAER-S-A-6492875/news/Embraer-delivers-61-aircraft-in-the-2nd-quarter-up-30-from-2Q24-50448721/