Trump’s 50% Tariff on Brazilian Imports Sends Shockwaves Through Global Coffee Market

 WASHINGTON / SÃO PAULO | July 11, 2025 — The Trump administration’s decision to impose a 50% tariff on Brazilian imports has triggered widespread concern across global commodity markets—particularly in coffee—threatening to significantly drive up retail prices in the United States and disrupt longstanding trade flows between the world’s largest coffee producer and its biggest consumer.

The tariff, announced on Wednesday and slated for implementation on August 1, has already rattled futures markets, with Arabica coffee contracts climbing 1.3% on Thursday. If enacted, industry experts say the duty could all but halt new shipments of Brazilian coffee to the United States, which imported over 8.14 million 60-kg bags from Brazil in 2024—accounting for roughly one-third of U.S. coffee consumption.

“A tariff of this size would effectively shut down the flow of Brazilian coffee to the U.S.,” said Michael Nugent, a senior coffee broker and owner of California-based MJ Nugent & Co. “Brazilian exporters won’t absorb the cost, and U.S. roasters simply can’t. Bottom line: Brazil will sell its coffee elsewhere, and the U.S. will be forced to buy from alternative origins—Colombia, Honduras, Peru, Vietnam—but not at Brazil’s volume or price.”

With global supplies already tight and prices near record highs after a 70% spike in 2024, traders warn that switching to alternative suppliers will inevitably raise costs for consumers. “Buyers choose Brazil for its value,” said a U.S. West Coast trading house director. “It’s not a matter of Brazil not selling—it’s whether the U.S. can afford to buy under this tariff regime. Probably not.”

Producers Eye Europe Amid U.S. Uncertainty

Brazilian growers, meanwhile, are bracing for impact. Paulo Armelin, a large-scale coffee producer who exports directly to U.S. roasters, said his clients are unlikely to shoulder the additional cost. “We’ll have to shift our focus—maybe to Germany,” he noted. “It was already difficult to close deals earlier this year, and this tariff will make things even harder.”

Cecafe, Brazil’s coffee exporters association, echoed those concerns. “This tariff could make exports unviable,” said director Eduardo Heron. “We hope coffee will be granted an exemption through diplomatic channels.”

U.S. Commerce Secretary Howard Lutnick hinted last month that products not produced domestically—such as tropical fruits, spices, and possibly coffee—could be eligible for exemptions, depending on ongoing trade negotiations. The U.S. produces only a minimal quantity of coffee, mostly from farms in Hawaii and small plots in California.

Wider Impact: Orange Juice, Ethanol Also at Risk

The impact of the tariffs extends beyond coffee. Orange juice futures surged 6% on Thursday amid fears of supply shortages, as more than half of U.S. orange juice imports originate in Brazil. The U.S. citrus industry has suffered steep declines in recent years due to disease, hurricanes, and frost. A recent USDA report projected the 2024/25 orange harvest would hit an 88-year low, with juice production expected to fall to record lows.

Brazil is also the world’s second-largest producer of ethanol, with 2024 output reaching 35 billion liters. While only a small portion—around 300 million liters—was exported to the U.S., analysts warn that any increase in ethanol tariffs could reverberate through the broader energy market.

Trade War Broadens

The U.S.–Brazil tensions come as part of President Trump’s broader push to recalibrate trade terms with multiple partners. Recent weeks have seen new tariffs imposed on key allies including Japan and South Korea, and a looming announcement on EU exports has rattled investor confidence worldwide.

“Markets are bracing for a new wave of protectionism,” said Joseph Capurso, Head of International Economics at Commonwealth Bank of Australia. “If this escalates to the level of the U.S.–China trade war, the consequences for global markets could be severe.”

As diplomatic channels remain open, all eyes are now on whether U.S. and Brazilian officials can find common ground before the August 1 deadline.