By Gabriel Araujo
SAO PAULO (Reuters) -The 50% tariff that U.S. President Donald Trump plans to impose on Brazilian exports starting in August could have an impact on the revenues of planemaker Embraer similar to that of the COVID-19 pandemic, its CEO said on Tuesday.
Chief Executive Francisco Gomes Neto told reporters that the tariffs could trigger order cancellations, deferred deliveries, lower investments and possible job cuts, while also generating an additional cost of around $9 million per airplane exported to the U.S.
The U.S. is the main market for Embraer, the world’s third-largest planemaker after Airbus and Boeing, with U.S. clients representing 45% of the firm’s commercial jet exports and 70% of its executive jet exports.
“Given the relevance of this market, we estimate that if this (tariff plan) moves on at this magnitude, we will have an impact similar to that of COVID-19 in terms of the decline in the company’s revenue,” Gomes Neto said.
He said a 50% tariff would be essentially a trade embargo on commercial jets, especially for Embraer’s E1 narrow-body aircraft, making shipments to U.S. airlines “unfeasible.”
Still, the executive said no order had been canceled so far.
Sao Paulo-listed shares in Embraer, which were up around 3% earlier in the day, became volatile during Gomes Neto’s remarks, wiping out the gains before ticking back up 1%.
(Reporting by Gabriel Araujo; Writing by Andre Romani; Editing by Brad Haynes and Kylie Madry)
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