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MILAN – The announcement that Trump’s 50% tariffs on Brazilian products would also apply to coffee did not affect Arabica and Robusta futures, which closed on Thursday, 31 July with little change. In New York, the September contract gained 240 points, closing at 295.80 cents. London saw marginal losses on closer contracts.
The contract for September delivery fell back $10 to $3,401 and the most active contract for November delivery fell $14 to $3,331. Meanwhile, Brazil’s influential coffee exporters’ association (Cecafé) said in a statement that it will “continue to negotiate” with its peers in the US so that the product can be included in the list of exceptions drawn up by the US government.
Among its partners, Cecafé mentions the National Coffee Association (NCA). Cecafé recalls that Brazilian coffee accounts for more than 30% of the North American market. The US is Brazil’s main coffee export destination, accounting for 16% of shipments.
The tariffs would ultimately fall on the U.S. consumer causing unreasonable price increases and inflation, concludes Cecafé, who hopes to at least avoid the additional 40% duties by limiting the tariffs to 10%.
The 50% percent tariffs on Brazilian coffee entering the U.S. market would result- if confirmed in the long run – in structural changes for the world coffee market.
The U.S. would inevitably decrease its coffee imports from Brazil, seeking to replace them—at least in part— with Latin American, Asian and African origins. Brazilian exports would, in turn, be redirected to other traditional consuming countries, primarily Europe, and to emerging markets like China, which has intensified its imports from Brazil in recent years to meet the growing domestic demand.
According to Cepea, this structural adjustment would require logistical flexibility and trade strategies to mitigate the damage to the domestic suply chain.
In the United States, higher import costs would jeopardise the sustainability of the domestic supply chain involving roasters, cafeterias, beverage industries and retail chains.
“Cepea believes that the entry into force of the duties would impact not only the competitiveness of the Brazilian coffee sector, but also prices for the North American consumer and the composition of traditional blends, which use Brazilian coffees as a sensory and balancing base,” concludes the Brazilian research institute.
On the other hand, according to Laleska Moda, Market Intelligence Analyst at Hedgepoint Global Markets, the 50% tariffs could reduce demand for coffee in the U.S. thus contributing to the reduction of the global supply deficit for the 2024/25 coffee year from an estimated 3.5 million bags currently, to 1.7 million.
