Brazil planemaker Embraer hopeful about fresh US sales despite tariffs

Reuters

5 days ago

SAO PAULO, Aug 6 (Reuters) - Embraer's (EMBR3.SA), opens new tab CEO believes the planemaker will be able to sell its E2 regional jets to a U.S. carrier, but acknowledges that tariffs on Brazilian goods may complicate efforts to secure a groundbreaking first order.
The company avoided a major setback last week when President Donald Trump exempted aircraft from a 50% tariff on U.S. imports from Brazil, but still faces a 10% duty imposed in April.
Embraer has long tried to sell U.S. airlines on the merits of its E195-E2 as a "small narrow-body" that could complement the operation of larger single-aisle jets, but has failed to score an order in its No. 1 market, even as it has landed clients for the plane in Europe and elsewhere.
"We believe it is (possible)," CEO Francisco Gomes Neto told Reuters on Tuesday. "But it does become more difficult because of the additional cost. We've been talking to potential customers, but of course, a zero rate would make it all much easier."
The tariffs come on top of the difficulty Embraer already faces in cracking that part of the U.S. market because of a mismatch between the weight of the aircraft and restrictions in pilot union agreements.
Embraer's smaller, first-generation E175-E1 jet, which complies with the clause, is key to U.S. regional routes and has no clear substitute.
The E2 family competes with the Airbus (AIR.PA), opens new tab A220 flown by carriers such as Delta (DAL.N), opens new tab and JetBlue (JBLU.O), opens new tab, for which the European planemaker has an assembly line in Alabama.
The Brazilian firm has been advocating for a return to zero-tariff rules for the aviation and aerospace industries, especially after a provisional deal between the U.S. and European Union exempted aircraft from tariffs.
"If Boeing's archrival is going to have a zero rate, why are we, who don't even compete with them, going to face 10%?" Gomes Neto said, referring to competition between Airbus and U.S.-based Boeing (BA.N), opens new tab. "It doesn't make much sense."
While making its case for tariff relief, Embraer has underscored its U.S. ties, including local jobs and plans to purchase $21 billion worth of U.S. products by 2030.
The firm's pitch includes a potential $500-million U.S. assembly line for its KC-390 airlifter, should the country decide to purchase the military jet, which competes with U.S.-based Lockheed Martin's (LMT.N), opens new tab C-130 Hercules.
"Competition there is tough, we're aware of that, but we're excited and believe there is an opportunity," Gomes Neto said, adding he recently presented the case to senior U.S. officials as a "business opportunity."
The executive added that Embraer has been working with a "relevant partner" to introduce the KC-390 in the country, but declined to name it.