Embraer (EMBR3) Avoids U.S. Tariffs: What It Means for the Brazilian Jet Maker

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. 

U.S. Tariffs on Brazilian Orange Juice and Coffee: Impacts and Strategic Responses

The recent imposition of tariffs by the United States on Brazilian orange juice and coffee has sparked concern among producers, exporters, and trade analysts. As two of Brazil’s most iconic and economically vital agricultural exports, these products are deeply embedded in global supply chains, particularly those connected to the American market. The effects of such tariffs could reverberate across both economies, altering trade flows, consumer prices, and long-term commercial strategies.

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Immediate Impacts on Brazilian Producers

Brazil is the world’s largest exporter of orange juice and one of the top exporters of coffee. The imposition of new U.S. tariffs, depending on their severity, will directly affect the competitiveness of Brazilian products in American markets. For orange juice, which is already facing declining consumption in the U.S., any additional cost imposed by tariffs could lead importers to seek alternative suppliers or increase domestic production, further reducing demand for Brazilian juice.

Coffee producers, particularly those exporting Arabica beans, may also see decreased competitiveness. While specialty coffee demand remains strong, price-sensitive segments of the U.S. market might shift towards other sources, such as Colombia or Vietnam, if Brazilian coffee becomes more expensive due to tariffs. 

The July figures in the United States indicate that the promise of a 50% tariff on items imported from Brazil is already affecting the prices of at least three products in the American market: beef, oranges, and coffee prices went up respectively by 1.4%, 4.4%, and 2.2%.

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Effects on U.S. Consumers and Importers

The likely outcome for U.S. consumers is a noticeable increase in prices for both orange juice and coffee. Given that Brazil supplies over 70% of the orange juice consumed in the U.S. and a significant share of its coffee imports, tariffs would disrupt established supply chains and raise import costs. These costs would be passed along to wholesalers, retailers, and ultimately, the end consumer.

In the short term, price hikes could result in reduced consumption, especially for orange juice, which is already seen as a declining category in American households. For coffee, a staple in most homes and businesses, consumers may shift to lower-grade blends or private-label brands to offset price increases.

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Alternative Trade Strategies for Brazil

To mitigate the impact of U.S. tariffs, Brazil can pursue several commercial alternatives:

1. Diversification of Export Markets: Brazil could intensify efforts to expand its presence in emerging markets such as China, India, and the Middle East. These regions have growing middle classes with increasing demand for premium food and beverage products, including fresh juice and high-quality coffee.

2. Strengthening Regional Trade: Mercosur and Latin American partners may become more important trade allies. By focusing on trade within South America and negotiating reduced trade barriers with Europe and Asia, Brazil can reduce its dependence on the U.S. market.

3. Value-Added Products: Instead of exporting raw or semi-processed juice and green coffee beans, Brazil could invest more in processing and branding. Exporting roasted coffee or ready-to-drink juices would allow Brazilian companies to capture more value and appeal directly to consumers in non-U.S. markets.

4. Trade Dispute Mechanisms: Brazil may also choose to challenge the tariffs through the World Trade Organization (WTO) or pursue bilateral negotiations, especially if the tariffs are perceived as unjustified or politically motivated.

While U.S. tariffs on Brazilian orange juice and coffee pose serious short-term challenges, they also present an opportunity for Brazil to rethink its trade strategy. By diversifying markets, investing in value-added products, and seeking new commercial partnerships, Brazil can reduce its vulnerability to unilateral trade measures. Meanwhile, American consumers and importers may face higher prices and a shift in product availability, highlighting the interconnected nature of global trade and the potential fallout of protectionist policies.

Moreover, according to several economists, the effects of the tariffs imposed by the U.S. may help reduce inflationary pressures in Brazil, as part of these products could be redirected to the domestic market, increasing supply and lowering prices. 

Petrobras (PETR3; PETR4): Gasoline Price Cuts, Market Reactions, and the Potential Return to Fuel Retail

 

Over the past three weeks, Petrobras — the state-controlled Brazilian oil giant — has been at the center of important market developments. A reduction in gasoline A prices, speculation about a return to the fuel retail sector, and continued political and economic pressures have reshaped discussions about its role in regulating fuel prices and controlling inflation in Brazil. Here is a full analysis of what happened, what changed, and what could come next.

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1. Gasoline A Price Reduction: The First Cut Since 2023

• On June 2–3, 2025, Petrobras announced a 5.6% cut in gasoline A prices sold to distributors, equivalent to a reduction of R$ 0.17 per liter, bringing the average price down to R$ 2.85 per liter.

• This move was the first price cut since October 2023, driven by rising demand: in April 2025, gasoline sales from distributors rose 4.6% year-over-year, reaching 3.81 billion liters, with cumulative sales for the first four months totaling 14.74 billion liters (+3.5% vs 2024).

• The impact on final retail prices was modest. Taxes (especially state ICMS), ethanol blend ratios, and resale margins made consumer prices slow to reflect refinery-level cuts.

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2. Short-Term Results and Market Dynamics

• Since that early June adjustment, Petrobras has not made further changes to gasoline prices.

• The company continues to apply its “competitive pricing policy”, introduced in 2023, which avoids reacting to short-term volatility in Brent crude or exchange rates. Price decisions are instead based on structural and sustained shifts in market conditions.

• Despite the refinery-level cut, the actual reduction observed at gas stations was limited and uneven across Brazil, due to the complex tax structure and market variations.

• Inflationary pressure from fuel prices appears contained in the short term, with no immediate need for further interventions.

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3. Petrobras and the Fuel Retail Sector: A Potential Comeback?

• In mid-July, reports emerged that Petrobras is internally discussing a potential return to the fuel retail sector—a market it left after fully privatizing its former retail arm, BR Distribuidora (now Vibra Energia), in 2021.

• The mere speculation of a comeback led to stock market turbulence:

  • Vibra Energia shares fell by about 2.5%.

  • Petrobras shares also dropped by around 0.5%.

• However, no official decision has been made, and Petrobras faces a contractual non-compete clause valid until 2029, which prevents it from re-entering the retail fuel segment under its own brand.

Legal and Strategic Challenges

• Any serious plan to return would require:

  • Creating a new fuel retail brand, or

  • Renegotiating/invalidating contracts with Vibra (unlikely before 2029), or

  • Reacquiring Vibra, which would involve high political and economic costs.

• Politically, a return to retail aligns with President Lula’s strategy to increase state influence in strategic sectors, ensuring more control over price pass-throughs and domestic inflation.

• Economically, it would demand major investment in logistics, workforce, and infrastructure to rebuild a national network capable of competing with private retailers.

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4. Summary Table: Where Things Stand

Topic	Current Status	Potential Impact
Gasoline A price cut	5.6% cut in early June	Moderate; limited consumer relief
Retail fuel prices	Slightly lower; regional variation	No major inflation relief yet
Return to fuel retail	Internal discussions only	Politically sensitive
Non-compete clause with Vibra	In effect until 2029	Blocks immediate retail comeback

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5. Conclusion

In the past three weeks, Petrobras has acted to manage domestic fuel prices through a rare gasoline price cut, signaling its intention to balance competitiveness with inflation control. Yet the broader discussion — its potential return to fuel retail — reveals deeper tensions in Brazil’s energy and economic policy. While no concrete move is underway, the political and market consequences of even a possible reentry are already unfolding.

Any serious effort to retake the retail space would require overcoming legal contracts, market resistance, and massive investment. For now, Petrobras remains cautious, but its future role in directly shaping fuel prices in Brazil could evolve significantly as elections approach and inflationary concerns persist.

Brazil to Host World's Largest Biogas Plant, Pioneering Sustainable Energy

The Louis Dreyfus Company (LDC) marks construction commencement of the world's largest biogas plant from citrus effluents, which is located in Bebedouro, São Paulo, Brazil. Covering an area of 195,000 square meters, the unit will be able to process 400 m³/h in effluents, create more than 50,000 Nm³ of biogas, and reduce CO₂ emissions at the local level by over 20%.

With this innovative technology from LDC, 100% reuse of treated water will be ensured while replacing fossil fuels. In the first half of 2026, the plant is expected to be in operation.

It is a measure through which LDC strengthens the commitment to decarbonize the supply chain and undertake sustainable development. The pilot project has already shown that that target was exceeded by 15 percent.

As one of the largest citrus juice processors and exporters, LDC goes on investing in green solutions for increasing efficiency and sustainability in the operations while minimizing environmental impacts and optimizing natural resource use.

Urca Group

The largest biomethane plant in Latin America is Gás Verde, a member of the Urca Group, in Seropédica, Rio de Janeiro. In this way, Brazil progresses toward becoming an increasingly important global player in the green economy.

The Seropédica plant refines biogas to produce biomethane, a fuel similar to natural gas derived from petroleum but with 80% lower emissions.

Petrobras (PETR3; PETR4) try to hold fuel prices, but gasoline and diesel will become more expensive in February

Petrobras is not expected to increase fuel prices in Brazil in the coming days. The board of the Brazilian state-owned company meets today to outline price plans for the coming weeks. However, due to the fall of the dollar in the last 10 days and the fear that the government has of an increase generating more inflation in the country, this adjustment should be delayed until March.

Yesterday, in a meeting with President Lula, the CEO of Petrobras, Magda Chambriard, said that at some point the company will have to readjust prices due to the lag in fuel prices (14% for gasoline and 11% for diesel) with international prices..

With the price changes established during the Lula government, Petrobras no longer automatically readjusts its prices to follow changes in the international oil market. Previously, Petrobras adopted an International Parity Price (PPI) policy adopted by Michel Temer's government and maintained by the Bolsonaro's government.

This policy led the company to constantly change fuel prices in the country. In 2021, with this policy, gasoline cost twice as much (more than R$ 11,00) as it costs today (R$ 6,19).

The previous pricing policy generated expensive fuel for the population and record profits for Petrobras shareholders. For many, this policy created by Temer increases shareholders' profits at the expense of Brazilian consumers, mainly because oil production in Brazil is not done in dollars, but in reais.

At the time, then-presidential candidate Ciro Gomes, who is also in opposition to the Lula government, commented:

“A barrel of Brent oil hit US$120 this morning, and they are going to transfer that”, said Ciro Gomes in 2022. 

Ciro argued that he had nothing "to do with the cost of Brazilian production, in real terms, with Russia's war in Ukraine”, for example, or with any other changes occurring in the international oil market given that a large part of oil production in Brazil takes place within the country.

This effort by Petrobras also comes as fuel prices are set to rise in February due to an increase in ICMS, a state tax levied by governors.

According to IstoÉ Dinheiro magazine, for gasoline, the tax collection is expected to increase by R$0.0979, from R$1.37 to R$1.47 per liter, which represents an increase of 7.14 %. For diesel, the ICMS will rise by 5.31% or R$0.0565, from R$1.0635 to R$1.12 per liter.

Brazil has an increase of 5.8% in the industrial sector in October compared to 2023

There has not been such a powerful rise in the Brazilian industrial sector for a long time. The sector's performance indicates that perhaps 2024 will be the year with the greatest industrial growth of the decade.

According to the Brazilian government, compared to the same month of October in 2023, industry production increased 5.8%, being the fifth consecutive month of expansion. The accumulated index for the year also increased (3.4%), as well as in the last 12 months (3.0%).

According to the Brazilian government, compared to the same month of October in 2023, industry production increased 5.8%, being the fifth consecutive month of expansion. The accumulated index for the year also increased (3.4%), as well as in 12 months (3.0%).

The concern is that import growth in the same period was 17%. 

The injection of income made through government programs produces, in turn, a large injection of demand in the country, which makes the Brazilian economy grow.

The fiscal push is very strong in Brazil. As Brazilian industry is not globalized, that is, it meets the country's internal needs more. With people having more money in their hands, the industry responds with growth and more investment. Domestic demand, driven by government programs, helps the industrial sector. 

Another factor that helps the industrial sector is the valued exchange rate. With the US$ worth R$ 6,00, companies with a greater presence in the global economy, such as Embraer, benefit because their products are very competitive internationally. 

Furthermore, the country has unemployment at a minimum. The country has the lowest unemployment rate in the last 13 years. This, in turn, produces inflationary pressure, which has been a concern for both the government and the financial market, which, in Brazil, is ideologically driven and, often, contrary to the government not for rational reasons, but for divergences. policies. Much of the Brazilian financial market.

It is common to see profiles of influencers linked to the financial market in Brazil harshly criticizing the PT and the Lula government while these same influencers praised the Bolsonaro's government and the decisions of the then Economy Minister Paulo Guedes.

Bolsonaro did not follow the country's spending control law, in fact, he exceeded this limit by R$795 billion in the 4 years of his government. The Brazilian financial market has never been as "nervous" as it is now, despite several positive economic indicators under the Lula government.

Who is Magda Chambriard, new president of Petrobras (PETR3; PETR4)

Magda Chambriard began her career at Petrobras. It was responsible for the first pre-salt auction and was closely related to the major global oil companies.

Chambriard worked for 22 years at Petrobras, where she began working in 1980. Between 2012 and 2016, Chambriard was the general director of the National Petroleum Agency (ANP).

Unlike her predecessor, Jean Paul Prates is a politician (Senator for PT for the State of Rio Grande do Norte). Chambriard is a technocrat and tends to follow President Lula's orders to the letter.

Therefore, she must follow the policy that the president defends, which is to transform Petrobras into a major investor to create jobs in Brazil and help recover the Brazilian economy.

Consequently, Petrobras should use its profits in the coming years to invest in, for example, a new naval industry in Brazil, thermoelectric plants, renewable energy, and the exploration of the Equatorial Margin, which is one of the last unexplored oil frontiers in Brazil. This region comprises the entire coastal strip to the north of the country and takes its name because it is close to the Equator.

Therefore, Alexandre Silveira and Rui Costas, two ministers from the Lula government emerged victorious. Both are lobbyists for thermoelectric plants, which should receive investments now.

The new president of Petrobras, who has already defended the privatization of Petrobras, must follow Lula's ideas. In the first speech she gave, Chambriard already defended the resumption, for example, of the naval industry in Brazil.

Petrobras (PETR3, PETR4) restarts works at the GasLub Hub, in Rio de Janeiro

Having been interrupted since 2015, the company restarted the work in Petrobras' GasLub complex.

On the 2nd, the company reactivated the contracting process to resume work in Itaboraí, in Rio de Janeiro.

The GasLub Complex, previously called the Rio de Janeiro Petrochemical Complex (Comperj), was designed for oil refining in Brazil. The government's idea is to help the country generate products with high-added value.

The entire project has been at a standstill since Operation Lava Jato, which discovered cases of corruption within the company and other companies with contracts at Comperj. However, the current government decided to reactivate all the work.

According to a statement from Petrobras, the set of units, when completed, will have the approximate capacity to produce 12 thousand barrels per day of Group II lubricating oils, in addition to 75 thousand B/D of S-10 diesel and 20 thousand barrels per day of aviation kerosene (QAV-1), with low levels of sulfur content.

The company's estimate is that the reactivation of the complex's works will generate up to 10 thousand direct and indirect jobs. 

Petrobras (PETR3, PETR4) was a highlight of the Brazilian Stock Exchange in April

The company which faced a drop in its shares in March, performed well in April after the decision to partially pay extraordinary dividends to its shareholders. This issue should continue to set the tone for its shares until the end of this year.

Petrobras reached the end of April with the biggest increases in the Ibovespa index, the main indicator of B3.

According to the website Infomoney, the Brazilian oil company's common shares ended April with an appreciation of 18.65%, while preferred shares increased by 15.57%. In the same period, the Ibovespa fell by 1.7% on a monthly basis.

Petrobras' decision on the payment of dividends almost generated a crisis in the Lula government, with the company's president Jean Paul Prates, and the minister of Mines and Energy Alexandre Silveira publicly debating the issue. The extraordinary dividends were withheld on March 19, when the company informed the market of the distribution of 50% of the amount, equivalent to R$22 billion. Petrobras also considered the possibility of distributing the other 50% throughout 2024. The new stance relieved investors who saw the risks of political interference give a respite.

After meeting, Petrobras (PETR3, PETR4) approves payment of 50% of extraordinary dividends

Petrobras' board of directors approved the payment of 50% of extraordinary dividends for 2023. The total dividends will correspond to 43.9 billion reais (approximately 8.5 billion dollars).

Last weeks, this issue has generated a crisis in the Lula government. The president of the state-owned company Jean Paul Prates, who is from PT, President Lula's party (center left), and the Minister of Energy, Alexandre Silveira, who is from the PSD of Minas Gerais, a right-wing party. According to Folha de S. Paulo, Petrobras also signaled additional distribution until the end of the year.

Petrobras (PETR3, PETR4) and Enarsa sign memorandum for partnership studies in the natural gas segment

Brazilian Petrobras and Argentine Enarsa signed a Memorandum of Understanding (MoU) on studies in the natural gas area.

According to Petrobras, the non-binding agreement has a term of three years. During this period, the two companies will exchange information and evaluate alternatives for energy cooperation and complementarity.

However, it still needs to be determined whether the plan will involve the export of gas in liquid format or whether the objectives of the two companies will be to put construction projects for new gas pipelines into practice.

The Brazilian newspaper O GLOBO revealed that the Lula government intends to import natural gas from the Vaca Muerta reserve, in Argentina. Perhaps, this MoU seeks to forward an understanding, including the technical aspects of this operation, between the two companies capable of guaranteeing the supply of Brazilian industries.