LatAm Transport and Capital Goods "Daily Take-Off: RAIL, EMBJ, WEGE, TUP..."

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LatAm Transport and Capital Goods "Daily Take-Off: RAIL, EMBJ, WEGE, TUP..."

In parallel with negotiations in Washington, Brazil’s Ministry of Development,

Industry, Trade and Services (MDIC) is resuming sectoral working groups with private

industry representatives to evaluate potential mitigation strategies and monitor

the impact of possible US trade measures. Meanwhile, the US administrative

process related to the proposed tariff remains on track for completion by July 15,

after which the measures could be implemented. Current proposals could expose

portions of Brazilian exports to combined tariffs of up to 37.5%, including the

additional 12.5% measure linked to forced labor investigations. Potential Impact:

Negative for WEG. As a recap, WEG’s exposure to US exports from Brazil is ~8% and

we calculate ~25% tariff would impact WEG’s margin by ~1.3%pp, all else equal.

Slightly negative for Randoncorp, as some Frasle exports may be impacted. Neutral

for Embraer, as aircraft remains exempted from the new tariffs. Neutral for Tupy, as

its products are subject to section 232 tariffs.

EMBJ: Airlines may delay aircraft purchase decisions

According to Reuters, Embraer’s CEO Mr. Francisco Gomes Neto stated that some

airlines are delaying decisions on whether to exercise aircraft purchase options

amid uncertainties related to the war in Iran. Nonetheless, the Brazilian aircraft

manufacturer has not observed requests to delay deliveries or a slowdown in

ongoing sales campaigns, while indicated that some caution is beginning to surface

regarding additional commitments. Potential Impact: Slightly negative for

Embraer. Higher-for-longer fuel prices could lead airlines to reassess capacity

expansion plans, potentially postponing new aircraft orders, delaying the exercise