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Canada News.Net
05-08-2025
- Business
- Canada News.Net
Brazil coffee tariff set to shake U.S. market, fuel price pressure
WASHINGTON, D.C.: A new 50 percent U.S. import tariff on Brazilian coffee is poised to shake up global trade flows, redirecting beans from the world's largest coffee producer away from American roasters and potentially into the hands of China and other alternative buyers. The Trump administration announced the tariff this week, saying it will take effect August 6 as part of a broader set of measures aimed at punishing Brazil over political disputes. The move throws into question the future of nearly eight million bags of coffee Brazil sells to U.S. buyers annually, roughly a third of all American coffee imports. "The global coffee trade flow will be reshuffled. The pain will be felt from Sao Paulo to Seattle, from origin to roaster, to cafe chains, grocers, and morning commuters," said Michael J. Nugent, senior U.S. coffee broker and owner of MJ Nugent & Co. The U.S. remains the world's largest coffee consumer at 25 million bags a year, with Brazil supplying about a third of that. The tariff threatens a US$4.4 billion trade relationship built over the past year alone. Analysts say China, a growing coffee market, is one of the likely beneficiaries. "More Brazilian beans may be bound for China because of trade ties between the two nations… and after the first Trump administration disrupted trade," said Marc Schonland, an advisor to the U.S. coffee industry. Brazil exported 538,000 bags to China in the first half of 2025, according to data from the exporter association Cecafe. Consumption in China is growing rapidly, with per capita intake doubling in the past five years and overall growth averaging 20 percent annually for a decade. Europe could also see a boost in shipments. "More Brazilian beans could also head to the European Union, where they face no tariffs," said Logan Allender, head of coffee at U.S. roaster Atlas Coffee Club. Traders may also seek workarounds. Coffee shipped through third countries like Mexico or Panama might bypass the full impact of the tariffs. "It will add a bit of logistics costs, but brings down the (tariff) effect to a max 10 percent to 15 percent," said Debajyoti Bhattacharyya of AFEX Ltd. "Without a strong traceable supply chain, tariffs are meaningless. I mean, we can't stop oil from flowing, why would coffee?" Some industry watchers say the tariff is politically motivated. The U.S. excluded coffee from an exemption list of Brazilian goods. "It's a bargaining chip," said Judith Ganes, soft commodities analyst, pointing to Trump's tensions with Brazilian President Lula da Silva and his defense of ally Jair Bolsonaro. Brazilian coffee shipped before August 6 will be exempt if it arrives in the U.S. by October 6. U.S. processor William Kapos said his firm is rushing to move existing inventory before the deadline. "But everybody will do that, so price-wise it is going to be a squeeze on U.S. buyers," he added, noting a shift toward Central American and African suppliers.
New Straits Times
11-07-2025
- Business
- New Straits Times
Trump's Brazil tariff rattles coffee market, could raise prices in US
NEW YORK: The 50 per cent tariff that the Trump administration has slapped on Brazilian imports has rattled the global coffee market and could make the price of a cup of coffee in the US jump beyond recent highs. Brazil is the world's largest grower and exporter of coffee, while the US is its biggest client and the world's largest drinker of the beverage, with nearly 200 million Americans having a cup every day. Coffee trade sources said the new duty announced on Wednesday, if confirmed on Aug 1, could halt new shipments of Brazilian coffee to the US, which imported 8.14 million 60-kg bags of the product from the South American country in 2024, or 33 per cent of its total consumption. "A tariff of this size would all but shut down that flow. Brazilian exporters won't absorb it. US roasters can't," said senior coffee broker and consultant Michael Nugent, owner of California-based MJ Nugent & Co. "Bottom line: Brazil will sell its coffee elsewhere. The US will buy coffee from someone else — Colombia, Honduras, Peru, Vietnam — but not at Brazil's volume or price," he said. Traders said alternative coffee supplies would be more expensive, since there is not a lot of it in the market. "Countries buy more from Brazil because it offers way better value versus expensive other origins," said the director of a trading house based on the US West Coast. "It is not if Brazil would sell, but would US buy (with the tariff)? Probably not," he said. Coffee drinkers around the world, including in the US, are already paying record or near-record prices for the beans after last year's 70 per cent price spike caused by tightening supplies. Arabica coffee futures jumped one point three per cent on Thursday due to the planned tariff hike. Eyes on Europe Paulo Armelin, a large Brazilian coffee producer that sells directly to US roasters, said his clients would not be able to pay up if the tariff is applied. "We will have to look for other markets, maybe Germany," he said, adding that it was already difficult to close deals earlier this year after the recent increases. US Commerce Secretary Howard Lutnick said last month during a Congress hearing that some natural resources that are not available in the US, such as tropical fruits and spices, could be exempt from tariffs, depending on negotiations with the countries producing and exporting them. The US produces only a fraction of the coffee it uses, with farms in Hawaii and a few in California. "I hope that diplomacy will work and in the end coffee will be added to any exemption list," said Eduardo Heron, a director at Brazilian coffee exporter group Cecafe, adding that exports could be made unfeasible by the tariff. OJ, Ethanol Beyond coffee, more than half of the orange juice sold in the US comes from Brazil, which exports other products such as sugar, wood and oil. Orange juice futures rose six per cent in New York on Thursday as the market fears a squeeze in supplies. The US has become more dependent on orange juice imports in recent years due to a sharp decline in domestic production due to the "citrus greening" crop disease, hurricanes and spells of freezing temperatures. A report issued by the US Department of Agriculture earlier this year forecast the US orange harvest would hit an 88-year low in the 2024/25 season while production of orange juice would slump to a record low. Brazil is the world's second-largest producer of the cane- or corn-based biofuel ethanol. The South American country produced some 35.00 billion litres of ethanol in 2024, but exported less than six per cent, of which only some 300 million litres went to the US, according to a report from BTG Pactual.
The Sun
11-07-2025
- Business
- The Sun
Trump's Brazil Tariff May Spike U.S. Coffee Prices
THE 50% tariff that the Trump administration has slapped on Brazilian imports has rattled the global coffee market and could make the price of a cup of coffee in the U.S. jump beyond recent highs. Brazil is the world's largest grower and exporter of coffee, while the U.S. is its biggest client and the world's largest drinker of the beverage, with nearly 200 million Americans having a cup every day. Coffee trade sources said the new duty announced on Wednesday, if confirmed on August 1, could halt new shipments of Brazilian coffee to the U.S., which imported 8.14 million 60-kg bags of the product from the South American country in 2024, or 33% of its total consumption. 'A tariff of this size would all but shut down that flow. Brazilian exporters won't absorb it. U.S. roasters can't,' said senior coffee broker and consultant Michael Nugent, owner of California-based MJ Nugent & Co. 'Bottom line: Brazil will sell its coffee elsewhere. The U.S. will buy coffee from someone else - Colombia, Honduras, Peru, Vietnam - but not at Brazil's volume or price,' he said. Traders said alternative coffee supplies would be more expensive, since there is not a lot of it in the market. 'Countries buy more from Brazil because it offers way better value versus expensive other origins,' said the director of a trading house based in the U.S. West Coast. 'It is not if Brazil would sell, but would U.S. buy (with the tariff)? Probably not,' he said. Coffee drinkers around the world, including in the U.S., are already paying record or near-record prices for the beans after last year's 70% price spike caused by tightening supplies. Arabica coffee futures jumped 1.3% on Thursday due to the planned tariff hike. Eyes on Europe Paulo Armelin, a large Brazilian coffee producer that sells directly to U.S. roasters, said his clients would not be able to pay up if the tariff is applied. 'We will have to look for other markets, maybe Germany,' he said, adding that it was already difficult to close deals earlier this year after the recent increases. U.S. Commerce Secretary Howard Lutnick said last month during a Congress hearing that some natural resources that are not available in the U.S., such as tropical fruits and spices, could be exempt from tariffs, depending on negotiations with the countries producing and exporting them. The U.S. produces only a fraction of the coffee it uses, with farms in Hawaii and a few in California. 'I hope that diplomacy will work and in the end coffee will be added to any exemption list,' said Eduardo Heron, a director at Brazilian coffee exporter group Cecafe, adding that exports could be made unfeasible by the tariff. OJ, Ethanol Beyond coffee, more than half of the orange juice sold in the U.S. comes from Brazil, which exports other products such as sugar, wood and oil. Orange juice futures rose 6% in New York on Thursday as the market fears a squeeze in supplies. The U.S. has become more dependent on orange juice imports in recent years due to a sharp decline in domestic production due to the 'citrus greening' crop disease, hurricanes and spells of freezing temperatures. A report issued by the U.S. Department of Agriculture earlier this year forecast the U.S. orange harvest would hit an 88-year low in the 2024/25 season while production of orange juice would slump to a record low. Brazil is the world's second largest producer of the cane- or corn-based biofuel ethanol. The South American country produced some 35 billion litres of ethanol in 2024, but exported less than 6%, of which only some 300 million litres went to U.S., according to a report from BTG Pactual- REUTERS
The Sun
11-07-2025
- Business
- The Sun
Trump's Brazil tariff rattles coffee market, could raise prices in US
THE 50% tariff that the Trump administration has slapped on Brazilian imports has rattled the global coffee market and could make the price of a cup of coffee in the U.S. jump beyond recent highs. Brazil is the world's largest grower and exporter of coffee, while the U.S. is its biggest client and the world's largest drinker of the beverage, with nearly 200 million Americans having a cup every day. Coffee trade sources said the new duty announced on Wednesday, if confirmed on August 1, could halt new shipments of Brazilian coffee to the U.S., which imported 8.14 million 60-kg bags of the product from the South American country in 2024, or 33% of its total consumption. 'A tariff of this size would all but shut down that flow. Brazilian exporters won't absorb it. U.S. roasters can't,' said senior coffee broker and consultant Michael Nugent, owner of California-based MJ Nugent & Co. 'Bottom line: Brazil will sell its coffee elsewhere. The U.S. will buy coffee from someone else - Colombia, Honduras, Peru, Vietnam - but not at Brazil's volume or price,' he said. Traders said alternative coffee supplies would be more expensive, since there is not a lot of it in the market. 'Countries buy more from Brazil because it offers way better value versus expensive other origins,' said the director of a trading house based in the U.S. West Coast. 'It is not if Brazil would sell, but would U.S. buy (with the tariff)? Probably not,' he said. Coffee drinkers around the world, including in the U.S., are already paying record or near-record prices for the beans after last year's 70% price spike caused by tightening supplies. Arabica coffee futures jumped 1.3% on Thursday due to the planned tariff hike. Eyes on Europe Paulo Armelin, a large Brazilian coffee producer that sells directly to U.S. roasters, said his clients would not be able to pay up if the tariff is applied. 'We will have to look for other markets, maybe Germany,' he said, adding that it was already difficult to close deals earlier this year after the recent increases. U.S. Commerce Secretary Howard Lutnick said last month during a Congress hearing that some natural resources that are not available in the U.S., such as tropical fruits and spices, could be exempt from tariffs, depending on negotiations with the countries producing and exporting them. The U.S. produces only a fraction of the coffee it uses, with farms in Hawaii and a few in California. 'I hope that diplomacy will work and in the end coffee will be added to any exemption list,' said Eduardo Heron, a director at Brazilian coffee exporter group Cecafe, adding that exports could be made unfeasible by the tariff. OJ, Ethanol Beyond coffee, more than half of the orange juice sold in the U.S. comes from Brazil, which exports other products such as sugar, wood and oil. Orange juice futures rose 6% in New York on Thursday as the market fears a squeeze in supplies. The U.S. has become more dependent on orange juice imports in recent years due to a sharp decline in domestic production due to the 'citrus greening' crop disease, hurricanes and spells of freezing temperatures. A report issued by the U.S. Department of Agriculture earlier this year forecast the U.S. orange harvest would hit an 88-year low in the 2024/25 season while production of orange juice would slump to a record low. Brazil is the world's second largest producer of the cane- or corn-based biofuel ethanol. The South American country produced some 35 billion litres of ethanol in 2024, but exported less than 6%, of which only some 300 million litres went to U.S., according to a report from BTG Pactual- REUTERS
