Brazil & Southern Cone - August 2025

As an innovative, high-tech company, aircraft manufacturer Embraer has long been one of Brazil’s poster-child exporters. Recently it has again been in the limelight, both for its stellar performance as well as for the risk of US import tariffs that would have threatened much of its business.

The São José dos Campos-based firm that specialised in regional aviation has staged a remarkable recovery over the past few years, following turbulent times during the aviation sector slump resulting from the coronavirus (Covid-19) pandemic and the collapse of a planned partnership with US aircraft manufacturer Boeing in 2020. Since then, annual revenue has been on an upward trend, and in 2024 reached its highest level ever at US$6.4bn, a 21% increase year-over-year. With 203 commercial and business jets delivered last year, it was the first of the major aircraft manufacturers worldwide to surpass pre-Covid delivery levels according to Air Current, an aviation news outlet.

Part of Embraer’s success has been its continued investment into new product development in niche markets. In 2019 it delivered the first C-390 military transport plane and in 2023 it began producing the Gripen E in partnership with Swedish manufacturer Saab, making Brazil one of the few countries in the world to build supersonic jet fighters.

Early indications are that 2025 could bring further growth for the company. The Brazilian firm delivered 61 aircraft in the second quarter of 2025, a 30% increase from a year earlier. It expects to deliver between 77 and 85 commercial planes and between 145 and 155 executive jets for the full year, an increase of 10% and 15% respectively over the previous year.

Fuelling optimism for the near future was a US$4bn order by the multinational Scandinavian airline SAS for up to 55 units of the E195-E2 aircraft, the biggest order for the carrier in nearly three decades and one of the biggest for Embraer. All that has bolstered Embraer’s value enormously. Shares surged more than 150% in 2024 and gained over 40% in the first half of the year to a record high.

And yet the past months have also exposed some of the fragilities of the world's third largest planemaker, after Airbus and Boeing. The threat of imposing tariffs on all Brazilian goods by US President Donald Trump highlighted just how much the aircraft manufacturer relies on the US market. Around 60% of its revenue comes from clients in the world’s largest economy. Embraer CEO Francisco Gomes Neto told Bloomberg that there was “no way to reallocate the US customers’ orders to other markets” in the short term.

Embraer already has a manufacturing plant in Florida but that only assembles its business jets, meaning all other aircraft would be exposed to an almost insurmountable trade barrier. “The company is considering an increase of its output in the US unit as an alternative, but it requires time and investments and will not be available for the company’s entire portfolio,” Neto said before the US administration included airplanes among the nearly 700 tariff exemptions.

Even if the immediate application of a 50% tariff appears to have been avoided, the unpredictability of President Trump’s trade policy may mean Embraer will continue to reassess its production sites and distribution. But with Brazilian politicians, particularly President Luiz Inácio Lula da Silva, concerned about losing jobs abroad ahead of general elections in 2026, that could prove a challenging task. Embraer’s geopolitical balancing act may be just beginning.

Success story

Born as a state-owned enterprise focused on aircraft for the country’s air force, Embraer is one of only a few examples of Brazilian companies whose privatisation, backed by proper public policies, produced world-class companies that generate jobs, national pride, and foreign currency. Another is the Brazilian mining giant Vale, which had been troubled by corruption and nepotism but emerged as a global mining company after its privatisation.