The Hispano-Luso Report · Friday 17 July 2026
On Wednesday night, Washington finally pulled the trigger. After a year of negotiations, three cordial presidential meetings and repeated assurances that a deal was close, the United States Trade Representative announced a 25% tariff on most Brazilian imports, effective 22 July. Secretary of State Marco Rubio’s verdict on the collapse was undiplomatic even by current standards: President Lula, he said, had put his ego ahead of making a deal. Brasília answered within hours — Lula rejected the decision as groundless, invoked Brazil’s unanimously passed Reciprocity Law, and promised to take the dispute to the WTO, pointedly noting that the United States has run a cumulative surplus of more than $420 billion with Brazil over fifteen years. And buried in the order’s annex, once again, sat an Embraer tariff exemption.
That is the story most coverage will tell. This article is about the more interesting one: the company that, for the third time in twelve months, walked through the wall untouched.
Three swings, three misses
Buried in the tariff order’s annex are more than 1,600 tariff lines exempted from the new duties — beef, coffee, orange juice, energy products, and, most strikingly, roughly 430 lines that exist specifically for civil aircraft and aircraft parts. Embraer, Brazil’s plane-maker and the world’s third-largest aircraft manufacturer after Airbus and Boeing, is not merely a beneficiary. It is, in practical terms, the reason the Embraer tariff exemption exists at all.
Consider the pattern. In July 2025, when the first Trump tariffs hit Brazil at 50%, aircraft were excluded from the steepest penalties — though a 10% duty still applied, and Embraer’s chief executive warned the full measure would have hit the company like the pandemic did, comparing the threatened blow to 2020, when Embraer’s revenue fell by roughly 30%. Analysts at Itaú BBA estimated at the time that 60% of Embraer’s revenue came from North America, three-quarters of it exposed, with the tariff adding around $9 million to the cost of every aircraft exported to the United States — a potential hit of some R$2 billion in a single year.
Then, in February 2026, the US Supreme Court struck down the emergency-powers tariffs altogether. Washington’s replacement regime — a 10% global duty imposed under Section 122 — contained a broad aerospace exemption, and Brazilian aircraft began entering the United States entirely duty-free for the first time since the dispute began. Brazil’s trade ministry openly celebrated; aircraft were the country’s third-largest export to the American market.
And now the third round. The Section 301 action concluded this week is the most legally durable of the three — it does not require congressional approval and survived the review process that killed its predecessors — and it is also the most surgical. Its architects went through Brazil’s export book line by line and, once again, stepped around the aircraft.
Why Embraer is untouchable: inside the tariff exemption
The answer is not sentiment, and it is not lobbying alone. It is that Embraer, operationally, is American regional aviation.
American customers buy 45% of Embraer’s commercial airliners and 70% of its executive jets. The E175 — the workhorse Embraer builds in São José dos Campos — is the backbone of the US regional fleet: the aircraft that connects Cedar Rapids to Chicago and Dayton to Atlanta, flown under the Delta Connection, American Eagle and United Express liveries. SkyWest, the largest US regional carrier, recently ordered sixty more of them. There is no American-built alternative in the category; the competing aircraft come from Canada’s Bombardier lineage and, increasingly, nowhere else.
The entanglement runs deeper than the customer list. Embraer’s executive jets are finished at its plant in Melbourne, Florida. Its aircraft fly on American engines and American avionics; a substantial share of the value of a “Brazilian” jet is manufactured in the United States and, under existing rules, deductible from any duty calculation. When the 50% tariffs were first threatened, Embraer’s CEO Francisco Gomes Neto made precisely this point: the measure would function as a trade embargo on the regional jets American airlines depend on, would hurt Embraer’s American suppliers as badly as Embraer itself, and could trigger order cancellations and deferred deliveries across the US industry. “It’s a lose-lose situation,” he said.
Tariff Embraer, in other words, and you do not punish São Paulo. You ground Ohio. You raise costs for the engine plant, the avionics supplier, the regional carrier and, eventually, the passenger in seat 14C — most of whom have never heard the company’s name, and nearly all of whom have flown on its aircraft.
Washington’s trade planners evidently understand this. Three tariff regimes, drafted under three different legal authorities by an administration not celebrated for restraint, have each concluded the same thing: this particular Brazilian company is too American to hit.
The passport and the centre of gravity
Readers of this publication will recognise the shape of this story. Ryanair is legally Irish and operationally Spanish. Santander is legally Spanish and increasingly, by its own description, American. Embraer is the pattern at its purest: a company whose legal nationality made it a target and whose operational nationality made it untouchable.
The lesson generalises. Tariffs, sanctions and industrial policy all assume that a company’s flag tells you where the pain will land. For the giants of the Iberian and Latin American world — built outward from mid-sized home markets by necessity — that assumption fails routinely. The corporate passport and the corporate centre of gravity have separated, and trade policy is still aiming at the passport.
What is not settled
Precision requires three caveats. First, “spared” is not “safe”: a separate Section 301 investigation into forced labour in supply chains concludes on 24 July and could add a further 12.5% to Brazilian goods broadly, and Washington has previously signalled continuing scrutiny of commercial aerospace specifically. Second, the Embraer tariff exemption removes the new 25% duty — it does not insulate the company from the steel and aluminium tariffs that raise the cost of materials across the industry, nor from whatever Brazil’s own Reciprocity Law retaliation does to Boeing’s position in the Brazilian market, a second-order effect worth watching. Third, the wider dispute is escalating, not resolving: Lula faces an October election in which standing up to Washington polls well, and the WTO route guarantees the argument runs for years.
For trade and supply-chain professionals, the practical takeaway is narrower and more immediate: under this regime, everything turns on tariff-line classification. The difference between an exempt HTS subheading and a covered one is now the difference between business as usual and a 25% cost increase — and as the Embraer tariff exemption demonstrates at the grandest possible scale, US content, final-assembly location and downstream American dependence are the assets that decide which side of that line you live on.
The next time you board a Delta Connection or American Eagle flight, look at the safety card. There is a good chance you are on a Brazilian aircraft. Washington knows it — which is exactly why, three times running, it has looked at Brazil’s biggest industrial champion and lowered the hammer somewhere else.
The Hispano-Luso Report publishes analysis of the companies and commerce of the Spanish- and Portuguese-speaking world. The first full edition of the Report arrives this Sunday — subscribe to receive it.
