JPMorgan sees up to R$ 234M US tariff refund for WEG

On 16 September 2026, JPMorgan released an estimate showing that Brazilian industrial manufacturer WEG could record an extraordinary gain of R$ 166 million to R$ 234 million in the third quarter of 2026. The windfall depends on whether the company successfully recovers import tariffs paid to the United States under the International Emergency Economic Powers Act (IEEPA).

The potential refund would represent approximately 7% to 9% of WEG's estimated EBITDA for the third quarter. It could lift the company's EBITDA margin for the period to between 23.6% and 24.2%, an increase of 150 to 210 basis points. That compares with JPMorgan's baseline projection of 22.1% and a market consensus of 21.9%. For full-year 2026, incorporating the gain would take the EBITDA margin to between 22.5% and 22.7%, topping the bank's 22.1% forecast and the 22.0% consensus.

According to data from Brazil's Foreign Trade Secretariat (Secex), WEG exported roughly R$ 1.68 billion from Brazil to the United States between April 2025 and February 2026. This total included R$ 621 million in power generation, transmission, and distribution (GTD) goods and R$ 1.056 billion in industrial electrical equipment and appliance motors. Assuming that short-cycle products make up 15% to 35% of GTD exports and 70% to 90% of appliance motors, JPMorgan calculated an eligible tariff base of R$ 832 million to R$ 1.168 billion subject to an average 20% tariff.

The US tariff landscape shifted repeatedly over that timeframe. IEEPA duties stood at 10% in April 2025, spiked to 50% from August to October, retreated to 10% in November, and reached zero in March 2026 after the US Supreme Court struck down the measure in February 2026. The US government replaced it with Section 122 tariffs of 10% to 15% through June 2026, followed in July 2026 by Section 301 tariffs totaling roughly 37.5%, including a 25% base rate and a 12.5% surcharge linked to forced labor. Meanwhile, a 50% Section 232 tariff on steel and aluminum took effect in June 2025 and remains active.

In its second-quarter earnings call, WEG management noted it was studying the potential recovery of duties paid. The company said Section 232 tariffs could still pressure margins, though relief measures would take one to two quarters to show. Management expressed confidence in offsetting impacts through price adjustments, expanded local production, and operational flexibility across Mexico and newly acquired Regal Rexnord assets. JPMorgan added that WEG trades at 19 times estimated 2027 enterprise value to EBITDA, above the 17.7 times average for global peers.