Shares of Brazilian aircraft manufacturer Embraer S.A. (NYSE:ERJ) dropped on Thursday after President Donald Trump announced plans to impose a 50% tariff on all imports from Brazil.
As the world's third-largest aircraft maker, Embraer relies heavily on the U.S. market for both its executive jets and regional airliners, making it particularly vulnerable to the proposed trade measures.
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What To Know: In response, Embraer stated it is assessing how the tariffs might affect its business and plans to provide more details during its second-quarter earnings call on Aug. 5. The company also mentioned it is working with authorities to try to reinstate a zero import tax rate for the aerospace sector, according to Reuters.
According to analysts at Itau BBA, 60% of Embraer's revenue comes from North America, and about three-quarters of that could be subject to the new tariffs.
They estimate the tariffs could reduce Embraer's earnings before interest and taxes (EBIT) by $150 million between August and December, Reuters reported.
Why It Matters: Aircraft are among the top U.S. imports from Brazil, alongside products like oil, steel, coffee and orange juice.
Embraer's E1 jets are a mainstay of U.S. regional airlines, with SkyWest recently ordering 60 E175 aircraft. The company also enjoys strong demand for its business jets in the U.S.
In February, Embraer Executive Jets entered into a major purchase agreement with Flexjet valued at up to $7 billion. The deal included a firm order for 182 aircraft, along with 30 additional options, and features an upgraded package of services and support.
Despite the recent drop, Embraer's shares are still up more than 30% for the year, following a 150% surge last year. Earlier this month, the stock reached a record high, driven by strong global demand for its aircraft.
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