Commercial Aviation
Embraer Exempted from Trump Tariffs Protecting US Brazil Aerospace Trade
Embraer avoids 50% tariffs on Brazilian imports, securing key U.S. market access and preserving billions in aerospace orders amid trade tensions.
Embraer Escapes Trump’s Tariffs On Brazil: Strategic Reprieve for Global Aerospace Industry
In July 2025, the Trump administration made a pivotal decision to exempt Brazilian aircraft manufacturer Embraer from proposed 50% tariffs on Brazilian imports. This move, formalized through Executive Order 14456, came amid broader trade tensions between the United States and Brazil. The exemption not only shielded Embraer from significant financial losses but also underscored the strategic importance of civil aviation in global economic diplomacy.
Embraer, Brazil’s aerospace crown jewel and the world’s third-largest civil aircraft producer, plays a critical role in the U.S. aviation market. With nearly half of its commercial jets and a majority of executive jets delivered to U.S. carriers, the exemption was viewed as a necessary measure to prevent disruption in the global supply chain. The decision followed months of lobbying by Brazilian officials and U.S. airlines, highlighting the interdependent nature of the aerospace industry.
This article explores the background, economic implications, recent developments, and broader geopolitical context surrounding Embraer’s tariff exemption. It also examines how this decision fits into the larger narrative of U.S.-Brazil trade relations and the global aerospace market.
Background: Embraer’s Global Position and U.S. Trade Tensions
Embraer holds a unique position in the aviation sector. As Brazil’s largest high-tech exporter, it has built a reputation for producing efficient regional jets, particularly the E175, which dominates the U.S. regional airline market. As of Q2 2025, Embraer reported a record $29.7 billion order backlog, driven by strong demand from North American and European carriers.
The Trump administration’s tariff threats emerged in early 2025, amid escalating political tensions with Brazil. These included disagreements over environmental policy, economic alignment, and the prosecution of former Brazilian President Jair Bolsonaro. The proposed tariffs were seen as both a punitive and strategic maneuver, targeting key Brazilian exports like steel, agriculture, and potentially aerospace.
However, the final tariff order issued on July 30, 2025, specifically exempted civil aircraft, engines, parts, and subassemblies. This exemption was interpreted as a recognition of the mutual economic benefits derived from aerospace trade and a desire to avoid self-inflicted harm to U.S. airlines reliant on Embraer jets.
Embraer’s Market Share and U.S. Dependence
Embraer’s commercial success is deeply tied to the U.S. market. Approximately 45% of its commercial aircraft and 70% of its executive jets are sold to American buyers. SkyWest Airlines alone accounts for a substantial portion of Embraer’s E175 backlog, with over 76 units on order, including 60 new units secured during the 2025 Paris Air Show.
The E175 is particularly important because it is one of the few regional jets that complies with U.S. scope clause agreements, which limit aircraft size for regional carriers. This makes Embraer a critical supplier for airlines like SkyWest, Republic Airways, and American Eagle.
Had the 50% tariff been applied, it would have added an estimated $9 million to the cost of each E175 aircraft. This would have jeopardized billions in future sales and potentially led to job cuts both in Brazil and the U.S. aviation sector.
“The exemption confirms the strategic importance of Embraer’s activities for the Brazilian and U.S. economies.”, Francisco Gomes Neto, CEO of Embraer
Tariff Policy and Executive Action
Executive Order 14456, enacted on August 6, 2025, provided the legal framework for the tariff exemption. While the order imposed a 50% tariff on a broad range of Brazilian imports, it specifically excluded civil aircraft and associated components. This decision followed extensive consultations between U.S. trade officials and stakeholders in the airline industry.
The exemption was also influenced by concerns over inflation and supply chain stability. With U.S. airlines already facing delivery delays from Boeing and Airbus, adding barriers to Embraer imports risked further operational disruptions.
Despite the exemption, a 10% tariff from an earlier April 2025 order remains in effect. Embraer continues to advocate for a complete rollback of tariffs, arguing that zero-tariff policies are essential for maintaining competitiveness in the global market.
Recent Developments: Diplomatic and Corporate Responses
The Brazilian government played a proactive role in securing the exemption. Vice President Geraldo Alckmin led negotiations with U.S. Commerce Secretary Howard Lutnick, emphasizing the strategic nature of Embraer and the potential ripple effects of tariffs on the broader economy.
In parallel, U.S. airlines lobbied for the exemption, warning that tariffs would force them to delay or cancel aircraft deliveries. SkyWest, in particular, indicated that tariffs would disrupt fleet renewal plans and reduce regional connectivity in underserved markets.
Following the exemption announcement, Embraer’s stock rose by 10%, reflecting investor confidence in the company’s ability to navigate geopolitical risks. The exemption also allowed Embraer to maintain its production schedule and avoid costly supply chain adjustments.
Impact on Orders and Deliveries
Embraer’s Q2 2025 results showcased the company’s resilience. The $29.7 billion backlog includes major orders from SkyWest (60 E175s) and Scandinavian Airlines (45 E195-E2s). These orders reaffirm Embraer’s position as a key player in the regional jet segment.
The exemption ensured that these orders would proceed without additional financial burdens, preserving jobs and production timelines. It also reinforced Embraer’s credibility as a reliable supplier amid global uncertainties.
Analysts at JP Morgan noted that the exemption reduced delivery risks and could drive Embraer’s stock to record highs, particularly if the company continues to secure new contracts in North America and Europe.
“All parties are motivated to work together on the tariff issue.”, Wade Steel, Chief Commercial Officer, SkyWest Airlines
Global and Industry Context: Broader Implications
The Embraer exemption illustrates the complexities of modern trade policy, where strategic industries like aerospace are often shielded from broader protectionist measures. The decision reflects a balancing act between economic nationalism and global interdependence.
While Embraer was spared, other Brazilian sectors, such as steel and agriculture, remain subject to high tariffs. This selective approach suggests that the U.S. administration is prioritizing industries with high domestic value chains and strategic importance.
From a global perspective, the exemption reinforces the need for stable trade frameworks in high-tech sectors. Aerospace manufacturing relies on intricate international supply chains, and disruptions in one region can have cascading effects worldwide.
Competitive Dynamics in Aerospace
Embraer’s ability to maintain momentum despite trade headwinds positions it well against competitors like Airbus and Boeing. While Boeing has focused on larger aircraft, and Airbus on narrow-body jets, Embraer continues to dominate the sub-100-seat segment.
The tariff exemption allows Embraer to continue expanding its market share in North America, especially as regional carriers seek fuel-efficient, scope-compliant aircraft. The E175 and E195-E2 remain attractive options for airlines seeking operational flexibility.
Looking ahead, Embraer’s continued success will depend on its ability to navigate geopolitical risks, innovate in sustainable aviation, and maintain strong relationships with key markets like the U.S. and Europe.
Conclusion
Embraer’s exemption from Trump’s 50% tariffs marks a significant moment in U.S.-Brazil trade relations. It reflects the strategic importance of the aerospace sector and the mutual benefits derived from cross-border collaboration. The decision helped avoid billions in potential losses, preserved vital airline operations, and reinforced Embraer’s role as a global aviation leader.
As trade tensions persist in other sectors, the Embraer case offers a blueprint for how diplomacy, industry lobbying, and economic pragmatism can converge to protect strategic industries. Moving forward, stakeholders will need to remain vigilant and proactive in preserving the stability of global supply chains in an increasingly complex geopolitical landscape.
FAQ
Why was Embraer exempted from the 50% tariffs?
Civil aircraft and related components were deemed strategically important to U.S. interests, particularly due to their role in domestic airline operations and supply chain stability.
What would have been the impact if the tariffs were applied?
Each Embraer E175 aircraft would have incurred an additional $9 million in costs, risking up to $3.6 billion in losses by 2030 and disrupting airline fleet plans.
Is Embraer still subject to any tariffs?
Yes, a 10% tariff from April 2025 remains in effect, although Embraer continues to advocate for a full rollback to zero tariffs.
Sources
Aviation Week, iNews Zoom Bangla, White House, GHY, AeroTime, FlightPlan, Economic Times, Korea Herald
Photo Credit: Reuters
Aircraft Orders & Deliveries
Riyadh Air Orders 31 A350-1000s and 67 Boeing 787s
Riyadh Air firms up A350-1000 and 787 Dreamliner orders at Farnborough 2026, targeting 100 global destinations by 2030.
Saudi Arabian startup carrier Riyadh Air (RX) has expanded its future widebody fleet by firming up an order for six additional Airbus A350-1000 aircraft at the Farnborough International Airshow on July 20, 2026. The agreement exercises purchase rights from a 2025 commitment for up to 50 airframes, bringing the airline’s total firm backlog for the European manufacturer’s largest twin-engine jet to 31 aircraft.
In a press release issued during the airshow, Airbus confirmed the transaction and noted that Riyadh Air will become the first operator of the A350-1000 in Saudi Arabia. The acquisition aligns with the carrier’s mandate to support the national Vision 2030 strategy, which targets serving more than 100 global destinations by the end of the decade.
Expanding the Airbus widebody footprint
The Airbus A350-1000 offers a maximum non-stop range of 9,700 nautical miles (18,000 kilometers), providing the operational capability required for Riyadh Air’s planned ultra-long-haul services. Airbus states the aircraft delivers a 25 percent advantage in fuel burn, operating costs, and carbon emissions compared to previous-generation widebody aircraft.
Riyadh Air Chief Financial Officer Adam Boukadida stated that the finalized order reflects continued confidence in the airline’s growth trajectory and the broader Saudi aviation sector.
“Increasing our A350-1000 commitment to 31 aircraft strengthens the foundation of our future network and supports our ambition to serve more than 100 global destinations by 2030 while delivering a premium guest experience,” Boukadida said.
Airbus Executive Vice President of Sales for Commercial-Aircraft Benoît de Saint-Exupéry added that the commitment highlights the aircraft’s efficiency and range. He noted the A350-1000 will play a central role in positioning Saudi Arabia as a leading international aviation hub. As of the end of June 2026, Airbus had recorded 1,595 firm Orders for the A350 family from 68 customers worldwide.
Concurrent Boeing 787 Dreamliner expansion
The Airbus finalization occurred alongside a separate widebody order placed with The Boeing Company. According to reporting by Al Arabiya, Riyadh Air also confirmed an order for 28 additional Boeing 787 Dreamliner aircraft at the Farnborough event on July 20.
This separate agreement introduces the Boeing 787-10 variant to the carrier’s fleet. Following the announcement, Riyadh Air’s total firm commitment for the Dreamliner family stands at 67 aircraft.
Riyadh Air Chief Executive Officer Tony Douglas told Al Arabiya that the introduction of the 787-10 and the expanded Dreamliner backlog marks another significant milestone in the airline’s journey toward its 2030 network goals. The carrier recently opened ticket sales for its initial overseas routes as it prepares for the launch of commercial operations.
AirPro News analysis
We view Riyadh Air’s dual widebody orders at Farnborough as a clear signal of the carrier’s aggressive timeline and robust capital backing. By splitting its high-capacity, long-haul requirements between the Airbus A350-1000 and the Boeing 787-10, the airline mitigates delivery risk in an era of constrained aerospace supply chains. Securing 31 firm A350-1000s and 67 Boeing 787s provides the necessary metal to rapidly scale a global network from scratch. However, the operational complexity of inducting two distinct widebody types simultaneously will require substantial training, tooling, and maintenance infrastructure investments prior to the Launch of commercial flights.
Sources: Airbus
Photo Credit: Airbus
Commercial Aviation
IndiGo Signs Record 1000 LEAP-1A Engine MoU with CFM
IndiGo and CFM International signed an MoU at Farnborough 2026 for 1,000+ LEAP-1A engines to power 510 A320neo Family jets.
Indian low-cost carrier IndiGo and CFM International signed a Memorandum of Understanding (MoU) on July 20, 2026, for more than 1,000 LEAP-1A engines to power 510 Airbus A320neo Family aircraft. The agreement, finalized at the Farnborough International Airshow, represents the largest single order for LEAP engines in the manufacturer’s history.
The procurement completes the engine selection for IndiGo’s outstanding narrowbody order book and includes a long-term material services agreement. According to a press release issued by GE Aerospace, the deal also provides support for establishing a new engine maintenance, repair, and overhaul (MRO) facility for the airline. CFM International operates as a 50/50 joint venture between GE Aerospace and Safran Aircraft Engines.
Record-setting engine procurement
The MoU covers the power requirements for a specific segment of IndiGo’s future fleet. Reporting by Aviation Week indicates the order breaks down to engines for 135 undecided Airbus A320neos and 375 undecided Airbus A321neos. The airline currently operates more than 430 aircraft, with over 375 A320 and A321 Family jets already supported by CFM.
Incoming IndiGo Chief Executive Officer Willie Walsh, who officially assumes the role by August 2026, stated the LEAP engine’s reliability makes it the ideal choice to support the carrier’s scale and operational resilience.
“As IndiGo embarks on its next phase of growth towards becoming a truly global airline, we are delighted to extend our long-standing partnership with CFM International for the engines powering future deliveries of our Airbus A320/321neo Family aircraft fleet,” Walsh said in the company statement.
GE Aerospace Chairman and Chief Executive Officer H. Lawrence Culp, Jr. noted the engines are delivering up to twice the time on wing in hot and harsh operating environments compared to their initial entry into service.
Transitioning the narrowbody fleet
The massive LEAP-1A commitment finalizes IndiGo’s pivot away from the Pratt & Whitney PW1100G geared turbofan (GTF) engine. Aviation Week reported the airline previously faced the grounding of up to 75 aircraft due to GTF durability problems and powder metal defect issues.
IndiGo began its relationship with CFM in 2016 with a sub-fleet of Airbus A320ceo Family aircraft powered by CFM56-5B engines. The carrier deepened that partnership in 2019 by selecting the LEAP-1A for its initial batch of Airbus A320neo and A321neo aircraft. The July 20 agreement ensures the remainder of the airline’s narrowbody deliveries will utilize CFM propulsion.
AirPro News analysis
We view this 1,000-engine MoU as a definitive operational reset for IndiGo as it prepares for leadership under Willie Walsh. The carrier’s previous exposure to Pratt & Whitney GTF supply chain and durability constraints severely impacted capacity. By standardizing the remaining 510 A320neo Family deliveries on the LEAP-1A, IndiGo is prioritizing fleet availability and predictable maintenance intervals over a split-engine strategy. The inclusion of localized MRO support in the agreement also signals a maturation of India’s domestic aviation infrastructure, reducing the airline’s reliance on constrained global overhaul facilities.
Sources: GE Aerospace
Photo Credit: GE Aerospace
Aircraft Orders & Deliveries
SMBC Aviation Capital Orders 200 Aircraft at Farnborough 2026
SMBC Aviation Capital placed firm orders for 100 A320neo family and 100 Boeing 737 MAX jets at Farnborough Airshow 2026.
Aircraft lessor SMBC Aviation Capital secured a massive dual-manufacturer commitment at the Farnborough International Airshow on July 20, 2026, placing firm orders for 100 Airbus A320neo family aircraft and 100 Boeing 737 MAX jets.
The 200-aircraft acquisition guarantees the lessor a steady stream of narrowbody deliveries into the mid-2030s. This strategic move comes as the broader aviation industry continues to grapple with persistent supply-chain bottlenecks that have constrained production rates at both major airframers.
Airbus narrowbody commitments
In a press release issued during the airshow, Airbus confirmed the firm order consists of 65 Airbus A321neo and 35 Airbus A320neo aircraft. The agreement pushes the total number of direct Airbus commitments from SMBC Aviation Capital and its parent company, Sumitomo Corporation, past 900 aircraft.
Airbus Executive Vice President of Sales for Commercial Aircraft Benoît de Saint-Exupéry highlighted the long-standing relationship between the manufacturer and the lessor.
“We are honoured to stand with SMBC Aviation Capital as they place this order for additional A320neo family aircraft, the world’s most leased and most traded aircraft making it the benchmark for airlines, lessors and investors alike,” de Saint-Exupéry stated.
Boeing 737 MAX and CFM engine agreements
Concurrently, SMBC Aviation Capital announced a matching commitment with Boeing for 100 narrowbody aircraft. The lessor’s official statement detailed a split of 60 Boeing 737 MAX 10 and 40 Boeing 737 MAX 8 jets.
To power the newly ordered Airbus fleet, SMBC Aviation Capital also secured an agreement for up to 90 CFM International LEAP-1A engines.
SMBC Aviation Capital Chief Executive Officer Peter Barrett emphasized the necessity of securing long-term availability for the company’s airline clients.
“This significant new order will give our airline customers access to a continuous delivery pipeline of the latest technology A320neo family aircraft into the mid-2030s,” Barrett said.
He added that the order reflects the lessor’s confidence in the sustained demand for the A320neo family. Deliveries for the newly ordered Airbus aircraft are expected to commence in the first half of the 2030s.
AirPro News analysis
We view SMBC Aviation Capital’s balanced 200-aircraft acquisition as a direct response to the current manufacturing environment. By splitting the order evenly between the Airbus A320neo family and the Boeing 737 MAX, the lessor is effectively hedging its delivery risks. Industry reporting from the 2026 Farnborough International Airshow indicates that total dealmaking may fall short of the ambitious 800-aircraft expectations held by some analysts, largely due to ongoing production bottlenecks at both Airbus and Boeing.
In an environment where near-term delivery slots are virtually nonexistent, securing a pipeline that stretches into the mid-2030s is critical for major lessors. Airline customers are increasingly reliant on lessors to provide capacity growth and fleet renewal options when direct manufacturer orders face multi-year backlogs. The inclusion of 60 Boeing 737 MAX 10s and 65 Airbus A321neos also underscores a continued market shift toward the largest variants of both narrowbody families, maximizing seat capacity in slot-constrained airports.
Sources: Airbus
Photo Credit: Airbus
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