US tariffs hit Embraer profits as deliveries rise

Embraer

US tariffs hit Embraer profits in the third quarter, even as aircraft deliveries increased. The US tariffs hit Embraer profits by raising parts and components costs across executive aviation and services. As a result, US tariffs hit Embraer profits and forced the Brazilian aircraft manufacturer to absorb extra costs while still investing in growth.

Tariff shock squeezes Embraer’s margins

Embraer reported that US tariffs cost the company $17mn in the third quarter. Most of the hit came from executive aviation, where higher prices for imported parts reduced profitability. Service and support activities also absorbed around $2mn in extra tariff-related costs.

However, the company still delivered 5pc more aircraft than a year earlier. This delivery growth shows robust demand for Embraer jets despite macro headwinds. Even so, net profit fell sharply to $54.4mn, down 75pc year on year and 54pc quarter on quarter. The profit squeeze highlights how quickly tariffs can erode margins in capital-intensive aerospace manufacturing.

The US imposed 50pc tariffs on Brazilian goods in July, directly affecting Embraer’s cost base. Management already signalled during the second-quarter call that tariffs would hit results. Now investors can clearly see the impact in Embraer’s third-quarter numbers.

Negotiations, strategy and electric aircraft investment

Embraer expects tariff pressure to ease if Brazil and the US reach a political agreement. The company pointed to the October meeting between presidents Luiz Inacio Lula da Silva and Donald Trump in Kuala Lumpur as an important milestone. Both leaders plan further talks focused on rolling back the extra duties on Brazilian exports.

Meanwhile, Embraer continues to invest in core programmes and future platforms. The group spent $98.6mn on operations and research projects in the quarter, only slightly below last year’s level. Its electric aircraft subsidiary Eve increased investment to $54.8mn, nearly doubling spending to advance urban air mobility solutions.

This strategic focus suggests Embraer will not let short-term tariff shocks derail long-term innovation. However, the company must carefully manage cash flows as it balances R&D, portfolio growth and the drag from higher US import costs. The outcome of US-Brazil negotiations will be critical for earnings visibility over the next few years.

The Metalnomist Commentary

The Embraer case underlines how quickly trade policy shifts can hit advanced manufacturing, even when end-market demand remains healthy. For aerospace suppliers and metals producers alike, US-Brazil tariff decisions will help determine future sourcing patterns for high-value components and alloy-intensive structures. Investors should watch both diplomatic progress and Embraer’s ability to pass through costs or re-engineer its supply chains.