US coffee, orange juice prices could surge if Trump’s Brazil tariffs stick
By May Angel and Marcelo Teixeira
LONDON/NEW YORK (Reuters) -U.S. consumers face sharp price rises on food staples like coffee and orange juice if the Trump administration sticks to its plan to slap 50% tariffs on all imports from Brazil, traders and experts said on Thursday.
They said the proposed import duty would halt the flow of Brazilian coffee to the Unites States, its biggest buyer, as neither U.S. roasters nor Brazilian exporters would be able to bridge the price gap resulting from the tariff.
U.S. President Donald Trump launched the new tariff on Wednesday, raising duty on Brazilian imports to 50% from 10%, effective August 1, despite the U.S. having a $7.4 billion trade surplus with Brazil, according to U.S. Census Bureau data.
Around a third of the coffee consumed in the U.S., the world’s largest drinker of the beverage, comes from Brazil, which shipped 8.14 million 60-kg bags to the United States in 2024, more than 30% more than in 2023, according to Brazil exporter group Cecafe.
"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 Nuggent, owner of California-based MJ Nuggent & 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.
"I don’t think it would be economically feasible to sell Brazilian coffee to the U.S. with the 50% tariff. Let’s see how this will evolve, but it would be very complicated," said the Brazil head of a major global commodities trader, without wanting to be named.
EYES ON EUROPE
Paulo Armelin, a large coffee producer that sells directly to U.S. roasters, said his clients would not be able to pay up if the tariff is applied.
He said negotiations for 2025 shipments were already difficult due to the 70% coffee price spike last year.
"We will have to look for other markets, maybe Germany."
More than half of the orange juice sold in the U.S. comes from Brazil, meanwhile, while the South American country also sells sugar, wood products, oil and oil products.
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, while it has become more dependant 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.
BEEF, ETHANOL
Brazil also exports a modest amount beef to the U.S. and the tariff has been welcomed by U.S. cattle producers.
"We fully support this tariff on Brazil. Brazil’s exports (have) contributed to the shrinking of our U.S. cattle industry. We need to rebuild and reduce our nation’s dependency on imported food. This is a step in the right direction," said R-CALF USA.
In terms of energy, Brazil is the world’s second largest producer of the cane or corn-based biofuel ethanol.
In a letter to Brazilian President Luiz Inacio Lula da Silva setting out his tariff plan, Trump criticised what he saw as Brazil’s attacks on free elections, social media platforms and digital trade activities of U.S. companies.
