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Analysts warn about the impact of Trump tariffs on shares of Brazil's Embraer

The shares of Brazilian planemaker Embraer dropped on Thursday, after U.S. president Donald Trump announced he would impose 50% tariffs on all imports coming from South America.

Analysts have warned that the third largest aircraft manufacturer in the world, with a large market for its executive jets and regional planes in the U.S., will be among the most affected firms by the tariffs.

Embraer shares traded in Sao Paulo fell as much as 8% after the news. They then pared some of their losses and ended up trading down about 3%. Embraer's shares were the largest decliners on Brazil's Bovespa index benchmark, which fell 0.4%.

In a statement, the planemaker said it was evaluating potential impacts of tariffs on its business and would provide additional comments during its earnings call for the second quarter on August 5.

The company works with the authorities to restore the

zero import tax rate

"We are also a major player in the aerospace industry," it said.

SkyWest recently placed an order for 60 E175 jets. Embraer E1 jets form the backbone of regional aviation in the United States. The demand for business jets has been high in Brazil, where Embraer has assembly lines.

Analysts at Itau BBA said that 60% of Embraer’s revenues are derived from North America. Of this, three quarters of them could be affected by tariffs. The analysts estimated that Embraer could lose $150 million in earnings before interest and tax (EBIT) between August and December.

Brazil's top imports to the United States are aircraft, oil, steel, coffee, and orange juice.

Analysts at XP said that "although we see Trump's statement primarily as a negotiation tool, we expect investors to remain concerned given the potential impact a 50% tariff on Brazilian products would have for Embraer."

They noted that although Embraer business jets are assembled in Florida, some of their content comes from Brazil. XP also added that tariffs may impact the demand for E1 jetliners in an inflationary market.

Embraer shares have risen more than 30% year-to date, after a 150% increase last year. The shares reached a new record earlier this month due to robust demand for Embraer's aircraft. (Reporting and editing by Paul Simao, Diane Craft and Gabriel Araujo)

(source: Reuters)