Brazilian aircraft manufacturer Embraer faces a devastating blow to its business as US tariffs threaten to add $9mn to the cost of each plane, the company's chief executive has warned.

The 50% levy on Brazilian goods, set to take effect from August 1, would create conditions resembling those during the COVID-19 pandemic and constitute what amounts to an “embargo on the company's operations,” according to Francisco Gomes Neto, Embraer's president and chief executive.

"The situation is very serious for us," Gomes Neto told reporters during a video conference on July 16, as he outlined the potential consequences for the world's third-largest aircraft manufacturer after US giant Boeing and Europe's Airbus.

The tariff poses an existential threat to Embraer's business model, with the United States serving as the company's largest market. Gomes Neto warned that no alternative market exists in the near term capable of absorbing the displaced demand, effectively shutting the Brazilian firm out of its primary revenue source.

Embraer, the world's third-largest aircraft manufacturer behind US Boeing and Europe’s Airbus, has established itself as a global leader in executive aviation and a major player in the regional jet market. The São Paulo-based company has built a strong international presence over nearly five decades, with significant operations spanning the Americas, Europe and Asia.

The measure would disrupt operations across Embraer's manufacturing facilities in both Brazil and the United States, whilst also affecting American suppliers integral to the company's production chain. Embraer maintains a significant US presence, having operated there for 45 years with approximately 3,000 employees.

American customers represent 45% of Embraer's commercial aircraft exports and 70% of its executive jet sales, according to company figures. The proposed tariff would impose an additional cost of BRL50mn (about $8.96mn) per aircraft, translating to annual losses of BRL2bn (about $358mn) for the manufacturer.

Under Embraer's expansion strategy running to 2030, the cumulative impact could reach BRL20bn (approximately $3.6bn), the company estimates.

The tariff announcement stems from US President Donald Trump's broader trade dispute with Brazil, linked to his criticism of the Brazilian Supreme Court's proceedings against former far-right president Jair Bolsonaro, a close ideological ally of Trump, over alleged coup plotting following the 2022 general election. Trump has also cited proposed regulations affecting US social media platforms operating in Brazil and claimed a trade deficit with the South American nation, though official data shows Brazil is among the few countries to actually run a trade deficit with the US.

On July 16, Brazil's Vice President Geraldo Alckmin said the country would seek dialogue to reverse the tariff decision, noting the "exiguous" deadline before the measures take effect. Brazilian officials have rejected what they termed "inappropriate statements" from Washington regarding Bolsonaro's trial.

Yet despite the dire projections, Gomes Neto expressed cautious optimism regarding diplomatic efforts to resolve the dispute. He pointed to recent tariff agreements between Washington and London in the aerospace sector as precedent for successful negotiations.

Economic analysis suggests the tariffs could reduce Brazil's GDP by 0.41%, with agribusiness particularly vulnerable. Legal experts believe the measures violate World Trade Organisation rules and have been declared illegal by US courts.