Trump’s new tariff chaos will benefit Embraer

Change in the White House benefits industry and reignites debate on trade policy

The Donald Trump administration’s U-turn on tariff policy brought immediate relief to Embraer, North American airlines and the commercial aerospace sector. The decision, announced on Tuesday, exempts commercial aircraft, engines and aerospace parts from the temporary 10% global tariff imposed under Section 122 of the Trade Act of 1974.

The measure changes the scenario that had been putting pressure on manufacturers and importers. Furthermore, it creates a window of opportunity for businesses hampered by tariff uncertainty. Still, experts urge caution. After all, the White House’s trade policy has fluctuated frequently, which keeps the business environment under tension.

According to the annex to the executive order signed by Trump, aerospace products are excluded from the tariff that had been announced to replace fees annulled on Friday by the US Supreme Court. Later, the president stated that the rate would rise to 15%, but the exclusion of the airline sector ended up being consolidated.

Embraer gains competitive advantage in the American market

The decision represents a direct boost to Embraer. The Brazilian manufacturer was already facing a 10% tariff on executive and regional jets sold to the United States. Although the company classified the charge as manageable, it acknowledged that the measure caused losses.

Last July, Trump imposed a 50% tariff on most Brazilian products. The objective, according to him, was to react to what he called a “witch hunt” against former president Jair Bolsonaro. Even so, the government spared the aircraft from the most severe penalties. Even so, Embraer jet importers continued to bear the 10% fee.

Now, with the new exemption, the Brazilian manufacturer reduces the disadvantage compared to Canadian Bombardier and French Dassault Aviation, which already accessed the American market without paying similar taxes. Therefore, the move repositions Embraer in a strategic and highly competitive market.

Furthermore, the news coincides with a relevant announcement from the company. Embraer confirmed this Tuesday a new variant of the Praetor family of executive jets, originally launched in 2018. This is the first evolution of the model since its debut, signaling confidence in the market’s recovery.

US Airlines May Speed ​​Up Deliveries

The change also benefits North American airlines that depend on Embraer regional aircraft. Industry sources say the exemption could speed up the import of new jets.

Alaska Airlines had already reported, in July, the delivery of two E175 regional jets after a short delay. On Monday, the company reported that the next delivery is scheduled for the summer, highlighting that the deadline will allow us to better understand how the tariff scenario will stabilize.

In other words, the government’s decision creates a concrete opportunity for companies to plan their fleets with greater predictability. Tobias Kleitman, president of TVPX, an American company that provides custody and customs services, summed up the industry’s sentiment: “Now it appears we have at least a window of opportunity to import these aircraft tariff-free.” He then pondered: “The question is how long this window of opportunity will last. But it is an impressive change.”

The statement was made during a webinar by the National Business Aviation Association, an entity that brings together business aviation operators in the United States.

Although the exemption is considered comprehensive, lawyers and executives maintain a cautious stance. The exclusion of the aerospace sector even exceeds benefits granted to large industrial exporters in previous agreements with the European Union, the United Kingdom, Japan, Canada and Mexico.

However, the Trump administration is conducting parallel investigations into Brazil’s business practices and the aerospace sector itself. Dave Hernandez, a lawyer specializing in executive aviation at the Vedder firm, classified the decision as a victory for Embraer. However, he warned of risks still present.

“It’s great that aircraft, engines and parts are exempt from Section 122 tariffs, but there remains a real concern that tariffs on steel and aluminum are increasing the final costs of aircraft, engines and parts,” he said.

In fact, tariffs on strategic inputs continue to put pressure on the production chain. Therefore, even with the current exemption, manufacturers face higher production costs. This may reduce part of the gain provided by the measure.

Section 232 Investigation Keeps Industry on Alert

Another sensitive point involves the investigation conducted by the US Department of Commerce under the so-called Section 232. The procedure assesses risks to national security arising from imports. If the government deems it necessary, it can impose new tariffs on planes, engines and parts.

Alex Krutz, principal at consultancy Patriot Industrial Partners and former assistant secretary for manufacturing at the Commerce Department, said he does not expect widespread tariffs. According to him, the aerospace sector already enjoys a history of exemptions and represents a net exporter to the United States.

“I think it’s recognized within the government that aerospace is a net exporter,” Krutz said. Therefore, the tendency, according to this reading, would be to preserve the competitiveness of a strategic industry for the American economy.

Commercial policy under criticism and social impact

The tariff change reignites the debate about the trade policy adopted by Trump. On the one hand, the president maintains that tariffs protect jobs and strengthen domestic industry. On the other hand, critics point out that volatility in decisions harms global production chains and creates insecurity for workers and companies.

In the case of Embraer, the exemption reinforces the importance of productive integration between Brazil and the United States. The manufacturer maintains a strong presence in the American market and supports thousands of direct and indirect jobs. Therefore, stability in trade rules impacts not only corporate balance sheets, but also entire communities.

Furthermore, airlines rely on predictability to plan long-term investments. When the government changes tariffs abruptly, companies need to recalculate costs, renegotiate contracts and review schedules.

Thus, although the current decision represents progress for the aerospace sector, it also highlights the need for more stable and transparent trade policies. The market celebrates the immediate relief. However, the industry knows that, in times of commercial disputes and strategic investigations, legal certainty remains the most valuable asset.

With information from Reuters*