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Embraer CEO: US tariffs may have pandemic effect on the planemaker.

According to its CEO, the 50% tariff that U.S. president Donald Trump intends to impose starting in August on Brazilian exports could have a similar impact on revenues as the COVID-19 epidemic.

The Chief Executive Francisco Gomes Neto said to reporters that tariffs may lead to order cancellations, delayed deliveries, reduced investments, and job cuts. They could also generate an additional cost of $9 million for each airplane exported to the U.S.

Embraer is the third largest planemaker in the world after Airbus. The U.S. accounts for 45% of commercial jet exports, and 70% of executive jet exports.

Gomes Neto stated that "given the importance of this market, if we continue to implement this (tariff plan), we will see a similar impact as COVID-19, in terms of a decline in revenue for the company."

He said that a 50% tariff on commercial jets would be like a trade embargo, particularly for Embraer’s E1 narrow body aircraft, which would make shipments to U.S. carriers "unfeasible."

The executive insisted that no orders had been cancelled so far.

Embraer shares listed in Sao Paulo, which had been up around 3% in the morning, were volatile after Gomes Neto made his remarks. The gains were erased, and then the stock ticked back up by 1%. (Reporting and writing by Gabriel Araujo, editing by Brad Haynes and Kylie Madry; Andre Romani is the writer; Brad Haynes is the editor)

(source: Reuters)