Impact of Trump's Proposed Tariff on Brazilian Coffee Imports

On July 10, 2025, President Donald Trump announced plans to impose a 50% tariff on Brazilian imports, a decision that could significantly affect coffee prices for American consumers. Brazil is the largest supplier of green coffee beans to the United States, accounting for approximately one-third of the nation's total coffee supply, according to data from the U.S. Department of Agriculture (USDA). This proposed tariff, which is set to take effect on August 1, could exacerbate existing inflationary pressures on coffee prices, following a period of rising costs due to droughts and frost impacting coffee crops globally.

The U.S. coffee market was valued at an estimated $19.75 billion in 2024, as reported by the market research firm Mintel. The potential increase in trade duties comes at a time when consumers have already experienced significant price hikes for coffee beverages, including lattes and cold brews. Earlier this year, coffee bean futures reached all-time highs, although they dipped slightly following the announcement of the tariff.

Despite the looming tariff, there remains a possibility for negotiation between the Brazilian government and the White House. U.S. Department of Agriculture Secretary Brooke Rollins indicated in a late June interview that the administration is considering exemptions for key commodities that cannot be produced domestically, including coffee. If such exemptions are not granted, companies reliant on Brazilian coffee will face steep increases in their operating costs.

Notable coffee companies, including J.M. Smucker (owner of Folgers), Keurig Dr Pepper, and Starbucks, are expected to grapple with higher commodity costs. J.M. Smucker's CEO, Mark Smucker, stated that coffee is a crucial component of the company's revenue, constituting roughly one-third of its total income. The company currently imports about 500 million pounds of green coffee annually, primarily from Brazil and Vietnam, the latter of which also recently announced a tentative trade deal with the U.S. that includes a 20% duty on its coffee imports.

Giuseppe Lavazza, chairman of the Italian coffee roaster Lavazza, discussed the implications of the tariff on Bloomberg TV, noting that it could lead to "a lot of inflation" within the coffee industry. Tom Madrecki, vice president of supply chain and logistics for the Consumer Brands Association, emphasized that the substantial tariff on Brazilian coffee would limit companies' ability to mitigate rising costs, particularly as coffee cannot be grown in the continental U.S. due to its specific climatic requirements.

To cope with the increased tariffs, coffee companies may seek to source beans from other countries. However, Madrecki warned that this strategy might not alleviate the financial burden on consumers. "A characteristic of tariffs, especially when you have tariffs on multiple countries at once, is that not just the inbound cost rises. It allows the pricing floor to also rise," he explained.

While major coffee brands are bracing for potential price increases, Starbucks, which sources coffee from over 30 countries and has a diverse menu, may opt to absorb some of the cost increases. According to TD Cowen analyst Andrew Charles, the new tariff could result in a 0.5% increase in Starbucks' North American cost of goods sold, impacting its earnings per share by approximately five cents annually.

Dutch Bros, another popular coffee chain, is projected to experience a more muted effect from the tariffs, as coffee costs comprise a smaller portion of its overall expenditures.

As the August deadline approaches, industry leaders, consumers, and policymakers will be closely monitoring the situation, weighing the potential economic implications of the tariff on the U.S. coffee market. The outcome will not only affect coffee prices but also the broader landscape of trade relations between the United States and Brazil, emphasizing the interconnectedness of global trade and consumer costs in the coffee industry.