Trump tariffs wreaking havoc in Brazil's citrus belt

Yahoo

24-07-2025

By Ana Mano
SAO PAULO (Reuters) -U.S. President Donald Trump's plan to impose a new 50% tariff on all Brazilian products from Aug. 1 could devastate the South American nation's citrus belt, as factories scale back production and orange farmers consider leaving fruit to rot amid a sharp drop in prices.
"You are not going to spend money to harvest and not have anyone to sell to," said grower Fabricio Vidal, from his farm in Formoso, in the state of Minas Gerais.
The new tariffs could make it impossible for his fruit to enter the United States, which buys 42% of the orange juice exported from Brazil, a trade worth around $1.31 billion in the season ending last June.
This month, orange prices in Brazil dropped to 44 reais ($8) a box, almost half of what they were a year ago, according to the widely followed Cepea index from the University of Sao Paulo, illustrating how Trump's disruptive trade policies can sow chaos even before enacted.
"As the day approaches in which tariffs will come into effect, anxiety increases about what might happen," Ibiapaba Netto, the head of orange juice exporter lobby CitrusBR, told Reuters in an interview.
IMPACT ON CONSUMERS
U.S. orange juice production dropped to its lowest level in half a century in the 2024/25 harvest, with output estimated at 108.3 million gallons, according to data from the United States Department of Agriculture cited by Cepea, which shows imports will represent 90% of U.S. supplies through September.
U.S. consumers will bear the brunt along with Brazilian farmers. An astounding half of the orange juice Americans drink comes from Brazil under household brands such as Tropicana, Minute Maid and Simply Orange.
Brazil, which produces 80% of the world's orange juice, will be hard to replace, too.
The U.S. has become more dependent on orange juice imports in recent years due to the "citrus greening" crop disease, hurricanes and spells of freezing temperatures.
But the new tariff on Brazilian imports represents a 533% increase over the $415 per ton duty levied on the country's juice now.
Last Friday, Johanna Foods, a New Jersey-based producer and distributor of fruit juices, challenged in court the proposed tariffs on Brazilian orange juice, claiming they would cause "significant and direct financial harm" to the company and U.S. consumers.
The tariffs may also spell trouble for Coca Cola and Pepsi, which account for some 60% of the orange juice sold in the United States, Netto said. Neither company replied to requests for comment.
NO EASY ANSWER
Brazil won't find it easy to replace American consumers, some of the most avid orange juice drinkers in the world.
Typically, higher-income countries import orange juice, limiting Brazil's potential reach into new markets. Brazilian orange juice is only sold to some 40 nations – representing about a third of the destinations that buy Brazilian meat, for example, according to trade data.
CitrusBR's Netto noted that hefty duties in markets such as India and South Korea, as well as low household income in China, have hampered trade with Brazil.
The European Union, in turn, already buys some 52% of Brazil's total exports, making it unlikely that countries there will make up for lost business with the U.S.
Companies will be left with few options.
One would be to export Brazilian orange juice through Costa Rica, which some companies already do to avoid the current duties, said Arlindo de Salvo, an independent orange consultant. But it is unclear whether exporters will be able to pull it off once the new levy starts being enforced.
As companies struggle to find new paths to consumers, farmers in Formoso fear the worst. Prices have already dropped to about a third of what growers were paid at this time last year, farmers said, making the cost of picking oranges hardly worth the trouble.
Grower Ederson Kogler said that the only solution would be to find other markets. But, he added, "these are things that don't happen overnight."