(Oct 26): Embraer SA warned the aircraft manufacturer will be battling order cancellations and delays if US President Donald Trump’s punitive tariffs are implemented.
“We don’t have any cancellation issues at this point in time, but mid-term, this might happen,” chief executive Oocer Francisco Gomes Neto said in an interview with Bloomberg Television’s Haslinda Amin on Sunday at the (47th) Association of Southeast Asian Nations (Asean) summit in Malaysia.
It would be bad for “the US industry because if we make fewer aircraft, we buy fewer equipments from the US. That’s why the zero tariffs is important,” he said. Neto estimated the move by Trump could add on US$2 million (RM8.44 million) per aircraft.
The Brazilian company still faces a tariff impact of about US$80 million this year, roughly equivalent to second quarter net income. The planemaker’s product and parts were among exemptions from higher tariffs slapped on the South America’s largest economy, in response to the treatment of ex-leader Jair Bolsonaro.
The CEO also said that the company still has about US$31 billion in backlog of new orders, its highest level in nine years.
His comments come as Brazil’s government still remains at odds with Washington. However, Brazil’s Luiz Inacio Lula da Silva is hoping to meet in Malaysia with Trump to convince him to cut punitive duties to 10% from 50%.
See also: AirAsia plans up to US$600m bond to replace private credit — Bloomberg
At stake for Embraer are plane orders, as tariffs raise the cost of its products. The planemaker is considering a US$500 million investment in a new US assembly line that would create 2,500 jobs if the US government selects its KC-390 military aircraft. The company also plans to invest another US$500 million in plants over the next five years.
The maker of commercial, business and defense jets is managing to weather the tariff threats with strong earnings growth, he said, adding the company has a “robust plan” for the next year.
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