Coffee prices rise again after Trump slaps Brazil with 50% tariffs

Coffee prices are on the rise after President Donald Trump announced a sweeping 50% tariff on imports from Brazil, the world’s largest coffee producer, sending a shock through global commodities markets and setting off fresh volatility in futures trading. 

Arabica coffee futures on the Intercontinental Exchange rose to $288.67 per pound, a 0.99% daily gain. The rebound follows a 2.6% rise on Tuesday to $285.60, which was blamed on concerns over dry weather in Brazil’s coffee belt.
 
Although prices have declined by around 17% over the past month due to harvest progress and expectations of increased supply, they remain nearly 18% higher than they were a year ago. 

London robusta futures, the global benchmark for the cheaper coffee variety, reached a record high of nearly $5,700 a ton earlier this year, significantly above the historical average of $1,700.  

Arabica prices similarly spiked last year, rising 70% to $4.20 per pound, driven by poor harvests in Brazil and Vietnam and strong speculative interest.  

Recently, prices for both arabica and robusta had fallen back slightly on hopes of improved harvests, but that outlook is now clouded by escalating trade tensions. 

The tariff, set to take effect on Aug. 1, was announced in a letter posted to Trump’s Truth Social account, where he accused the Brazilian government of “attacking free speech” and orchestrating a “witch-hunt” against longtime ally Jair Bolsonaro, the country’s former president.  

Trump said the tariff was also a response to a “very unfair trade relationship” with Brazil, despite the United States reporting a $7.4 billion goods trade surplus with the country in 2024, according to the Office of the US Trade Representative. 

Brazilian President Luiz Inacio Lula da Silva said Wednesday that Brazil will respond with reciprocity to Trump’s tariff. Lula cited a recently adopted Brazilian law authorizing the government to take proportional countermeasures. 

Bolsonaro, Brazil’s former president, is facing multiple criminal charges, including plotting a coup to overturn the 2022 election and undermine democracy. Prosecutors allege he conspired with aides and military leaders, culminating in the January 2023 riots at government buildings.  

The tariff announcement immediately jolted coffee markets. Arabica coffee futures trading in New York jumped more than 3.5% on Thursday morning in response. Arabica beans, which are used in higher-end coffee products, are primarily sourced from Brazil.
 
A trader told the Financial Times the letter is “sending shockwaves across the coffee industry,” adding: “The US is Brazil’s main coffee buyer, so this tariff will certainly hit sentiment.” 

“The problem is not to have tariffs between America and Europe,” Giuseppe Lavazza, chair of Lavazza Group, which owns Lavazza coffee, told FT.  

“The problem is to have tariffs between US and Brazil, US and Vietnam, US and all the countries where coffee is produced.” 

Lavazza said that consumers will have to contend with “a rise in the cost of coffee in the US.”  

Lavazza said that while a 10% levy on EU goods was “fine,” tariffs on coffee-producing nations like Brazil and Vietnam would be more challenging for coffee companies and would inevitably raise prices for American consumers. 

The sharp reaction in prices reflects the importance of Brazil in global coffee supply chains. 

Brazil is the world’s leading producer of arabica beans. The country’s 2025 harvest is currently about 40% complete, down from 52% at this time last year.  

Favorable weather and increased supply had previously contributed to price declines, but the new US tariff has reversed that trend in the short term. 

The volatility is compounded by currency movements. The Brazilian real dropped more than 2% against the US dollar following Trump’s announcement, encouraging more export selling from Brazil and placing further downward pressure on prices — at least in the short term. 

According to analysts, the longer-term impact of the US tariffs is uncertain.  

While the immediate market reaction has been bullish due to concerns over supply disruptions, the tariffs could eventually curb US demand for Brazilian coffee, leading to a potential correction in prices.  

The Post has sought comment from the White House.