Fallout from the US Coffee Tariffs on Brazil

The global coffee sector, and especially the American and Brazilian markets, has been shaken by a 50 percent United States tariff on Brazilian coffee and other goods that took effect on 7 August. The general tariff announced on 30 July saw the administration of President Donald Trump cite unhappiness with the prosecution of former Brazilian President Jair Bolsonaro, a Trump ally, as
grounds for increasing the tariff from an earlier 10 percent to 50 percent(perWhiteHouse.gov).

How ever, President Trump met Brazil’s centre-left President Luiz Inácio Lula da Silva in September during the UN General Assembly session, and got along, and have agreed to meet in future — so maybe these tariffs will not last at this punishing level. On 6 October, the two leaders spoke for 30 minutes on the phone and exchanged phone numbers. Trump said in a post on his Truth Social account that the conversation focused on trade and the economy, adding that they would have further discussions and “get together in the not-too-distant future.”

While the steep tariffs remain, with the United States being the world’s largest coffee consumer by overall volume consumed, and around a third of that demand being met by Brazil, the trade barrier has hit American businesses and
consumers hard.

Federal data show the consumer price index for coffee in American urban retail markets rose nearly 15 percent over the past year (to August 2025) based on Federal Reserve Bank figures shared with Tea & Coffee Trade Journal by the National Coffee Association (NCA) of the USA. “Two-thirds of American adults drink coffee daily, and only one percent of the coffee Americans need can be grown domestically,” said William Murray, the NCA’s president and CEO.

Brazil, the world’s most prolific coffee producer, has supplied about 30 percent of the US market, Mexico between 20-27 percent, and Vietnam around 10 percent, based on US Department of Agriculture (USDA) and World Bank data.

When President Trump announced the tariffs, global coffee stocks w ere already tight due to climate pressures pushing up prices. The cost of a pound of coffee has jumped 102 percent in five years in urban US coffee markets, according to the NCA (based on Federal Reserve Bank data).

“Global coffee trade is complex, and it’s not possible to generalise how tariffs w ill continue impacting growers, businesses or consumers,” Murray said. “But we expect further significant impacts the longer tariffs remain in place — particularly the 50 percent tariff on Brazil.”

Brazil’s Gains and Strains
Brazilian growers are benefitting from historically high prices, with profit margins above 100 percent, said Márcio Ferreira, president of Brazil’s Coffee Exporters Council (Cecafé).

Rising demand from Europe and Asia has helped offset the current and anticipated drop in US orders. Still, opening new markets brings higher costs, exacerbated by Brazil’s 15 percent annual interest rates, and the risk of US buyers cancelling contracts.

Trade data already reflect the shift. Cecafé figures show Brazilian coffee exports to the US fell 57 percent by volume in September(2025) from a year earlier. Shipments of conilon, a type of Robusta, plunged 86 percent, while soluble coffee exports dropped 51 percent (both by volume), said Ferreira. He added that he has seen reports of US companies posting heavy losses,
with small coffee shops at risk of closing due to higher prices. Brazil, however, has so far avoided major damage thanks to a balanced harvest. The exception is soluble coffee, or instant coffee, which has lost ground in the US, while green
beans have been redirected else where.

Since the tariffs took effect, Brazil has received more orders from Asia and Europe. The rush has driven futures back toward record levels reached
earlier this year. On 6 August, the day before the tariffs took hold, futures traded at USD $286 per pound (lb) at the Intercontinental Exchange in
New York. By mid-September, prices spiked to $424, close to the January (2025) peak of $429 as reported by Reuters.

“The problem is that this reallocation doesn’t happen quickly, so the costs we face are real impacts as well,” said Ferreira.

Transformation at Home

Transformation at Home Indeed, long-term risks loom if US tariffs remain. Analysts warn that while soaring prices have fuelled investment, prolonged
barriers could trigger a sharp downturn. Ferreira said the biggest threat comes in bumper harvest years. If Brazil boosts output, as projections suggest, but loses US market share, an oversupply could affect prices.

With the USA being Brazil’s largest import market, buying about eight million bags of coffee annually, 16.7 percent of its total exports (per Comex stats) losing that market could leave Brazilian beans flooding other destinations,
weakening competitiveness.

Ferreira warned that tariffs during a large harvest could create damaging surpluses without US access. “Our interest is to maintain our US market share, and we will only achieve that with the removal of the tariff,” he said.

Green coffee exports have already been redirected, said Ferreira, but soluble coffee producers are already feeling losses – given as a finished product, prepared for a specific client, for a particular type of consumer, such output
is harder to reallocate.

Given these trading pressures, Brazil’s coffee sector is undergoing a transformation driven by high prices and pressure for efficiency. Both
factors have boosted productivity and expansion to these new Asian and European markets. For example, Brazil is also expanding Robusta cultivation and increasing yields with technology. Without traditional buyers, that progress could backfire, turning a success story into a liability.

With current margins exceeding 100 percent, growers are reinvesting in technology and new plantings. Some highly productive farms now achieve up to 240 bags per hectare, while the average is about 55 bags per hectare. Farmers are replacing old trees with higher-yielding clones planted more densely. One grower who replanted 60 percent of hiscrop, said Ferreira,
reported yielding 120 to 125 bags per hectare.

Profitability is drawing fresh players and expanding frontiers. Robusta cultivation has spread beyond traditional areas in southeast Brazil into Amazon states such as Acre and Mato Grosso. Advances supported by the Brazilian Agricultural Research Corporation (Embrapa – Empresa Brasileira de Pesquisa
Agropecuária) and state agencies have made it possible to grow conilon at altitudes once seen as unviable, up to 1,000 metres.

Diplomatic Tensions
Brazil’s ministry of development, industry, trade and services, leading negotiations with Washington, DC said in a statement that “the Brazilian government is working to overturn the tariffs imposed on part of our exports and to expand our sales to the US as well as to other global markets.”

When speaking with Tea & Coffee Trade Journal in late September, Ferreira remained optimistic about a potential deal, highlighting Lula’s UN General Assembly ‘chemistry’ with President Trump. Despite this, bilateral relations remain frosty for the time being, maybe their worst in decades. President Trump not only imposed steep tariffs over Brazil’s actions against Bolsonaro and his allies — accused of planning and attempting a coup to wrest power from Lula but also sanctioned top Brazilian justices and officials under the Global Magnitsky Human Rights Accountability Act, which targets human rights abusers.

Ferreira agreed that the trial of Bolsonaro, who in September was sentenced to 27 years in prison for attempting the coup after losing the 2022 election, was a key cause of poor relations. Meanwhile, the US Trade Representative
Jamieson Greer has also launched an investigation into Brazil for alleged unfair
practices in digital payments, ethanol, intellectual property and deforestation, which could lead to further American trade barriers.

Brazil countered that the US had a trade surplus of more than $410 billion with the South American nation over the past 15 years. It has also filed a complaint with the World Trade Organisation (WTO), though a resolution
could take years. Brazil argued in its case to the WTO disputes settlement body that the USA, through its protection, has breached the WTO general agreement on tariffs and trade (GATT) and its disputes settlement understanding
(DSU) per the WTO.

Ferreira said markets are betting more on dialogue led by Brazilian business leaders than on WTO proceedings. With official diplomatic channels strained, industry groups have stepped in to ease tensions. “Coffee associations have been doing quiet but persistent work behind the scenes,” he said.

Encouraging Signs
A first positive sign, Ferreira noted, came from Trump himself. In a detailed decree, the US president exempted some Brazilian products from tariffs. Coffee was not fully spared, but green beans were placed in Annex 3,a category covering goods not produced in the US and eligible for zero tariffs. The market interpreted this as hopeful.

Another encouraging move came from the US Congress. On 22 September(2025) lawmakers introduced bipartisan legislation, a ‘No Coffee
Tax Act’, (per Democratic Representative Don Beyer’s website) to repeal Trump’s tariffs and lower consumer costs.

“Americans started a revolution over a tax on tea. Coffee prices have increased significantly in the past year, in part due to Trump’s tariffs. If you drink coffee every morning, how can you not be mad about that? Our bipartisan bill is simple: it removes Trump’s tariffs on coffee to bring down costs,” said Democratic Representative Ro Khanna, one of the sponsors in a statement.

“Families across America are feeling the cost of higher coffee prices, already up 21 percent. Tariffing a product we can’t grow at a commercial scale only makes it worse. Tariffs are simply a tax on American consumers, raising prices without creating jobs or bringing production home,” added Republican Representative Don Bacon, another sponsor, in a statement.

Ferreira sees market pressure and time as allies in reversing the tariffs. “The longer they remain, the less Brazilian coffee will be available in the US,” he said.

NCA’s Murray added, “President Trump has provided a pathway to remove tariffs from coffee as a beneficial natural resource not available in the US, but only if negotiators reach satisfactory trade deals. If negotiators act on this opportunity, we believe they can conclude agreements that keep coffee trade flowing.”

• Gabriela Sá Pessoa is a Brazilian journalist based in São Paulo.
  She reports for The Associated Press and previously worked
  for The New York Times and The Washington Post. She was the
  International Women’s Media Foundation’s (IWMF) 2023 Elizabeth
  Neuffer Fellow.