Turbulent Times

Embraer is heavily dependent on the U.S. market, and tariff concerns could impact its overall health, says ATUL CHANDRA

- ATUL CHANDRA

Embraer can be considered as the backbone of the U. S. regional airline network with carriers like SkyWest Airlines, Envoy Air, Porter Airlines and Republic Airways, together operating over 700 aircraft from the Brazilian airframer. In fact, Embraer's E175 is considered the cornerstone of regional aviation in North America.

According to Martyn Holmes, CCO, Embraer Commercial Aviation, "North America is a critical market for Embraer, where the E175 is the backbone of the regional network, with over 620 aircraft sold, and 86 per cent market share. Embraer aircraft deliver essential connectivity to 206 airports in the US alone." Embraer's Executive Jet business is also heavily dependent on the U.S. market for 70 per cent of its sales. According to various estimates, just over 60 per cent of all the aircraft made by Embraer are sold into the USA.

While all seemed to be well, an official communication from the White House this July announced U.S. President Donald Trump's plans for the imposition of a 50 per cent tariff on all imports from Brazil, due to take effect August 1, 2025. This resulted in significant near-term uncertainty on Embraer's aircraft sales to the USA. According to an industry expert, these tariffs could make Embraer Regional Jets more expensive by USD 9 million per aircraft. He cautions that the imposition of these tariffs would significantly impact Embraer's sales, equivalent to the COVID-19 era disruption, but also pose challenges to the U.S. regional aviation network, which depends heavily on the Brazilian airframer's products.

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