Increased tariffs on Brazilian coffee exports might cause coffee consumers to experience discomfort
The U.S. government's plan to impose a 50% tariff on all coffee imports from Brazil could lead to significant changes in the American coffee market. This tariff, set to take effect on August 1, 2025, could disrupt existing supply chains, increase costs for businesses, and ultimately lead to higher prices for consumers.
**Supply Chain Disruptions**
Brazil is the world's largest coffee producer and a key supplier to the U.S., accounting for about a third of the coffee consumed in the country. The sudden tariff increase will significantly raise the landed cost of Brazilian coffee, potentially causing shortages as importers adjust their supply chains.
**Industry Impact**
U.S. coffee businesses, particularly those heavily reliant on Brazilian beans, will face increased input costs. This could force them to absorb higher costs, pass the price increase on to consumers, or seek alternative, potentially more expensive, sources. The tariff could also affect companies not directly buying from Brazil, as increased demand for coffee from other regions could drive up global prices.
**Consumer Impact**
Consumers can expect to see higher retail prices for coffee at grocery stores and cafés. The tariff, combined with recent supply issues due to droughts in Brazil and Vietnam, could push prices significantly above the current average of nearly $8 per pound. There may also be sporadic shortages or reduced product variety if some businesses cannot afford the higher prices or are unable to secure alternative supplies quickly.
**Quality and Selection**
There may be a shift in the types of coffee available, as roasters substitute Brazilian beans with those from other regions, potentially altering flavor profiles and quality standards.
**Broader Economic and Diplomatic Effects**
The tariff's political nature introduces uncertainty into U.S.–Brazil trade relations, with the potential for broader economic repercussions in the global coffee market. The move risks damaging long-term trade relations between the U.S. and Brazil, and could invite retaliatory measures from other coffee-producing nations, further destabilizing the market.
**Alternative Sources and Domestic Production**
Florida, a major domestic producer of oranges, has faced growing difficulties, and may not be able to make up the slack if Brazil's exports are affected by the tariffs. Hawaii's coffee is mostly a specialty product, and costs two or three times more than even high-quality imported beans. Labor costs are much higher in Hawaii, as are commodities like water and energy, making it unlikely for the state to produce more coffee for the American market even if tariffs drive up the costs of its competitors.
**Timeline**
It would take about three months after the tariff goes into effect for consumers to see higher prices at stores. Coffee grows best at higher altitudes, in places with tropical temperatures and heavy rainfall. In the U.S. and its territories, this is limited to Hawaii and Puerto Rico.
**Current Prices**
At the end of May, the average price of 1 pound of ground roast coffee in the U.S. was $7.93, up from $5.99 at the same time last year. Brazil accounted for more than 8.1 million bags of coffee that came into the U.S. last year.
**Market Pressure**
The tariff would put more pressure on the coffee industry, as prices have peaked globally this year. Large coffee buyers, like Starbucks, source their coffee from all over the world, but there could be a scramble as some customers try to shift their supply chains to avoid the tariffs on coffee from Brazil. More than 99% of the coffee Americans consume is imported from South America, Africa, and Asia. The U.S. last year produced a small fraction of the coffee consumed by Americans - 11,462 metric tons - and nearly all of it in Hawaii.
**Conclusion**
A 50% tariff on Brazilian coffee imports would profoundly disrupt the U.S. coffee industry, leading to higher prices, potential shortages, and operational challenges for businesses—especially smaller roasters. Consumers would face increased costs and possible changes in product availability and quality. The tariff’s political nature also introduces uncertainty into U.S.–Brazil trade relations, with the potential for broader economic repercussions in the global coffee market.
- Businesses in the food-and-drink sector, especially those in the coffee industry, may need to invest heavily to adjust their supply chains and resources following the 50% tariff on Brazilian coffee imports.
- The increased costs for businesses due to the tariff could lead to a significant shift in consumer lifestyle, as they may need to allocate more finance towards purchasing coffee.
- The tariff on coffee imports from Brazil could impact the overall business environment, as higher coffee prices might affect consumer spending patterns in other sectors.
