Brazil coffee tariff set to shake U.S. market, fuel price pressure
The Trump administration announced the tariff this week, saying it will take effect August 6 as part of a broader set of measures aimed at punishing Brazil over political disputes. The move throws into question the future of nearly eight million bags of coffee Brazil sells to U.S. buyers annually, roughly a third of all American coffee imports.
"The global coffee trade flow will be reshuffled. The pain will be felt from Sao Paulo to Seattle, from origin to roaster, to cafe chains, grocers, and morning commuters," said Michael J. Nugent, senior U.S. coffee broker and owner of MJ Nugent & Co.
The U.S. remains the world's largest coffee consumer at 25 million bags a year, with Brazil supplying about a third of that. The tariff threatens a US$4.4 billion trade relationship built over the past year alone.
Analysts say China, a growing coffee market, is one of the likely beneficiaries. "More Brazilian beans may be bound for China because of trade ties between the two nations… and after the first Trump administration disrupted trade," said Marc Schonland, an advisor to the U.S. coffee industry.
Brazil exported 538,000 bags to China in the first half of 2025, according to data from the exporter association Cecafe. Consumption in China is growing rapidly, with per capita intake doubling in the past five years and overall growth averaging 20 percent annually for a decade.
Europe could also see a boost in shipments. "More Brazilian beans could also head to the European Union, where they face no tariffs," said Logan Allender, head of coffee at U.S. roaster Atlas Coffee Club.
Traders may also seek workarounds. Coffee shipped through third countries like Mexico or Panama might bypass the full impact of the tariffs. "It will add a bit of logistics costs, but brings down the (tariff) effect to a max 10 percent to 15 percent," said Debajyoti Bhattacharyya of AFEX Ltd. "Without a strong traceable supply chain, tariffs are meaningless. I mean, we can't stop oil from flowing, why would coffee?"
Some industry watchers say the tariff is politically motivated. The U.S. excluded coffee from an exemption list of Brazilian goods. "It's a bargaining chip," said Judith Ganes, soft commodities analyst, pointing to Trump's tensions with Brazilian President Lula da Silva and his defense of ally Jair Bolsonaro.
Brazilian coffee shipped before August 6 will be exempt if it arrives in the U.S. by October 6. U.S. processor William Kapos said his firm is rushing to move existing inventory before the deadline.
"But everybody will do that, so price-wise it is going to be a squeeze on U.S. buyers," he added, noting a shift toward Central American and African suppliers.
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