US tariffs on Brazil spark turmoil in the coffee market

Donald Trump’s trade war has reached Brazilian coffee producers. The U.S. president’s decision to impose a 50% tariff on all imports from Brazil has abruptly cut off one of the busiest channels in the global coffee market: U.S. companies are rejecting new contracts and reviewing existing ones with Brazilian producers. They are seeking to buy time to see if there is room for negotiation. But the commodity’s price has already been shaken: futures contracts for arabica coffee — the sweeter variety traded in New York — rose at the fastest weekly pace in nine months (over 10%), marking seven consecutive days of gains, the last on Thursday, with a 3.3% jump.

Protectionism has created imbalances between supply and demand. While the base price of coffee has risen on international markets, the premium paid for exclusively Brazilian coffee, now less sought after, is falling. This is a typical phenomenon in international trade when tariffs are imposed: the exporter usually takes the hit in the short term and lowers prices to avoid being shut out of the market. The importer, for its part, may see its margins reduced and try to renegotiate prices and contracts. And if the measure persists over time, the higher costs eventually reach consumers’ pockets.

“The current situation for U.S. roasters is like having to choose between a Ferrari and a Toyota,” says Gustavo Gómez, president of Asoexport, Colombia’s coffee exporters’ association. “Let’s say Colombian coffee, for its quality, is the Ferrari. And Brazilian coffee, more mass-produced, is the Toyota. Now, because of the tariffs, the Toyota costs almost the same, so… I’d rather buy the Ferrari.”

Pavel Cardoso, president of the Brazilian Coffee Industry Association (ABIC) — which brings together the companies responsible for production, marketing, and certification of coffee in South America’s largest country — says: “The United States has nowhere to find coffee at the price and quality that Brazil offers,” and recalls that the U.S. coffee industry moves $343 billion a year, equivalent to 1.2% of U.S. GDP.

He adds: “The disruption in the supply chain caused by the tariffs will raise prices in the short term, both for arabica and robusta [the more bitter variety traded in London], especially for U.S. consumers.” After exporters, the next on the list of those affected by the tariffs are end customers.

According to Marcos Antonio Matos, the CEO of Brazil’s coffee exporters’ council (Cecafé), the U.S. and Brazil have a very close relationship when it comes to the coffee industry: “Coffee accounts for more than 8% of the total value of the U.S. food service industry, and Brazil supplies 32% of the coffee consumed there. For every dollar spent on imported coffee, an additional $43 is injected into the U.S. economy.”

That multiplier effect is explained by everything that happens after the coffee arrives at the ports: transportation, storage, roasting, marketing, sales in supermarkets and coffee shops, associated jobs, taxes, and complementary services. Matos, who will travel to Washington in September to negotiate an exemption, warns: “Iconic U.S. coffee brands could be affected, even disappear, if they are forced to modify their blends.”

High volatility

Volatility has been the order of the day in coffee prices during 2025. The nearest contract price has risen 23% this year, but anyone who bought into April’s fever and sold in July’s panic would have lost 30% of their investment. On Tuesday alone, prices in New York jumped nearly 4% and are up 28% in August alone.

The likelihood that a cup of coffee will become more expensive in the U.S. is increasing. In Canada, where there are no tariffs on coffee imports, beverage prices have risen more than 27% this year — double the rate reported in the U.S. “The risk is obviously that tariff-related price rises are belatedly reflected in the U.S. data, and in any event show up in a lower volume of consumer spending. In other words, the tariff risk hasn’t gone away,” warns Bloomberg macro strategist Cameron Crise in a note.

“U.S. intermediaries will seek coffee in other producing countries, but when they do, they will find higher prices,” warns Cardoso. “Breaking established supply chains — such as Vietnam’s exports to Europe or Asia — will mean those countries will charge the U.S. more. That will push market prices higher,” he adds.

Meanwhile, other producers want to take advantage of the price surge. Colombia has just come off record harvest numbers and aims to grow further. But Gómez offers a reality check: “Colombia cannot [exponentially] increase its production overnight.” That’s due to nature: a coffee tree takes two years to grow. “What can be done now is to take advantage of the moment to sell the bean at a better price,” he concludes.

Colombia, the world’s third-largest coffee producer, is the second-largest supplier to the U.S. and ships twice as much as Vietnam, which ranks third. “Among the world’s six leading coffee producers, Colombia has ended up with the best tariff position,” explains Wilber Jiménez, CEO of 930, a Colombian company that grows, roasts, and sells coffee by the cup.

Colombia faces a 10% tariff, compared to Brazil’s 50% or Vietnam’s 20%, its two direct competitors. Jiménez, while acknowledging that the country does not have the capacity to replace Brazil in volume, says this difference is a competitive advantage that will allow them “to gain ground in reputation and price.”

The pressure on prices is also explained by technical moves from futures market operators. Speculators have intensified their early purchases, betting that roasters — who usually cover their needs between August and October — will soon have to step into the market to secure their December supplies.

“Knowing that the roaster is likely going to need to buy December futures in the next eight weeks gives speculators another reason to keep pushing coffee futures higher,” explains Ilya Byzov, a Sucafina trader, to Bloomberg.

Weather is another risk factor: “The arabica harvest was already smaller, and a recent frost has confirmed that trend,” Cardoso confirms. “Inventories are at historic lows, and the market is already looking ahead to the 2026 harvest, which could be a record if the weather allows. But until then, volatility will set the pace.”

Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition