On July 30, 2025, U.S. President Donald Trump signed an executive order imposing a 50% tariff on a range of Brazilian exports, but notably excluded aircraft, along with energy and pulp, from these tariffs. This exclusion was a significant reprieve for Embraer, as nearly half its commercial aircraft and 70% of its executive jet sales are to U.S. customers.
Prior reactions had been dire: executives warned a 50% tariff could raise costs by up to $9 million per plane, potentially causing $358 million in earnings hit in 2025 alone and likening the impact to a COVID‑19-like revenue collapse. However, prior to the exclusions, some analysts suggested the effect might resemble an embargo on U.S. sales.
Embraer had earlier reaffirmed its 2025 financial outlook, projecting limited impact, estimating just a 0.9 percentage‑point reduction in EBIT margin thanks to high U.S.
Financial Position & U.S. Customer Exposure
As of Q2 2025, Embraer holds a record firm order backlog of $29.7 billion, up 40% year‑on‑year. Commercial jets account for $13.1 b billion, executive aviation $7.4 b, and defense about $4.3 b
U.S. airlines remain critical buyers: American Airlines ordered 90 E175s, SkyWest another 74, Republic more, and Horizon Air has resumed taking deliveries after short delays due to tariff concerns
Implications of the Aircraft Exemption
The exemption clause in the tariff order means Embraer’s key U.S. market remains accessible, which spiked the company’s stock by ~11% post-announcement.
Still, the broader trade conflict raised red flags earlier: CEO Francisco Gomes Neto had warned the situation could force order cancellations or deferrals, especially for smaller, lower‑margin business jets like the Phenom series.
Brazilian authorities also moved quickly. Brazil’s government is planning relief such as credit lines to help support Embraer, though not tax exemptions, to maintain business confidence.
Strategic Moves: Europe & Defense Segment Expansion
Embraer is exploring establishing a final assembly line for its KC‑390 military cargo plane in Poland, potentially generating $1 b in local value and creating about 600 jobs. Other proposals include E2 airframe subassembly, passenger-to-freighter conversions, and landing gear overhaul facilities—totaling potentially $2 b in investment and over 4,400 jobs in a decade
The KC‑390 has gained traction across Europe, with orders from Czech Republic, Austria, Netherlands, Sweden, Slovakia, plus current operators like Portugal and Hungary
Asia, India and China Opportunities
Embraer is in talks with the Indian government and major conglomerates to potentially establish manufacturing or assembly operations, depending on access to India’s booming domestic jet market, currently dominated by Airbus and Boeing.
The company is also strengthening supply-chain collaboration in China: its E190‑E2 and E195‑E2 jets recently received Chinese certification, and there's a new freighter conversion deal with a Chinese partner.
Long‑Term Product and Market Strategy
While speculation exists that Embraer may eventually consider scaling into larger narrowbody aircraft beyond the E2 family, experts note the financial and certification challenges make such a move highly complex, especially against entrenched competition like Boeing and Airbus.
Outlook and Next Steps for Embraer
With the aircraft exemption in place, Embraer’s immediate U.S. sales exposure is significantly eased. In response, the company is likely to:
- Engage in diplomacy to maintain or extend duty-free status for aviation products,
- Tap into government support in Brazil, including credit lines,
- Accelerate European defense expansion—especially the Polish KC‑390 ecosystem build-out,
- Expand industrial and MRO presence in emerging markets such as India and China, leveraging recent certifications and potential local partnerships,
- Continue diversifying its geographic footprint beyond the U.S. to reduce single‑market dependency.
Embargo scenarios appear to have been avoided, at least for now, but Embraer’s strategy has clearly shifted toward mitigation and expansion. Tightening its international presence, especially in defense and Asia-Pacific markets, may prove key to counterbalance any future policy shifts or trade turbulence.
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