Trump Tariffs on Brazil: NUE Up, EMBJ Neutral

On July 15, the Office of the U.S. Trade Representative (USTR) announced a 25% Section 301 tariff on many Brazilian imports, effective July 22. The tariffs target unfair trade practices related to digital payments, intellectual property, and market access.

The tariffs cover thousands of products, but key exemptions include coffee, beef, orange juice, and aerospace components. This action marks a new chapter in trade strategy under the Trump administration.

Brazil is a major supplier of steel products to the U.S., particularly pig iron used in electric arc furnaces. While some steel products are already subject to separate Section 232 duties, the broader tariff could shift demand toward domestic producers.

For Embraer, the exemption of civil aircraft and aerospace products limits direct impact, but the company remains exposed to potential retaliation or broader trade tensions.

Tariffs reduce import competition, which historically supports domestic pricing and utilization rates for U.S. steel producers. Nucor, as North America's largest steel producer, could benefit from increased demand for domestic steel and pig iron.

Nucor's downstream businesses in construction, infrastructure, and energy also provide diversified exposure. However, steel demand ultimately depends on industrial activity, not just tariffs.

For Embraer, the aerospace exemption is critical since nearly 60% of its revenue comes from North America. Without it, the company would face significant headwinds.

However, trade disputes rarely remain static. Additional tariffs or retaliatory measures could increase uncertainty for future aircraft orders or complicate supply chains. Prolonged tensions may weigh on investor sentiment toward Brazilian exporters.