chairman Donald Trump50% proposed Tariff on Brazil’s import There is bad news for coffee drinkers.
According to data from the US Department of Agriculture, the largest American supplier of Green Coffee Beans is about one third of the total supply of the country.
Coffee beans need to grow in a warm, tropical climate, making air and pureto Rico the only suitable place in the United States to cultivate crops. But, as the top consumer in the world of coffee, the US requires mass supply to be caffeinated. Mintal estimate The US coffee market reached $ 19.75 billion last year.
Consumers can be abandoned with higher costs after increasing the prices of coffee after many years after increasing business duties. Inflation-wheat consumers have seen prices for the climb of lattes and cold brow as drought and frost hit the global coffee supply, especially in Brazil. earlier this year, Coffee bean futures All-time high hit. They rose 1% on Thursday, although in February also below the record set.
To ensure that it is still time for Brazil to apply on 1 August before attacking a deal with the White House. Plus, food and beverage manufacturers are expecting that Trump administration will provide discounts for major items. US agriculture department Brooke Rollins said In an interview in late June, the White House is considering exemption for production that cannot be grown in the US – including coffee.
But if this does not happen, then coffee companies like the owner of the folders JM Smocker, Kerig Dr. Paper, Starbucks And Dutch bros Will face a lot of cost for commodity. Giuseppe Lavazza, Italian Roster Lawaja chair, Said on Bloomberg TV The latest tariff on Thursday morning can mean “a lot of inflation” for the coffee industry.
Rosters will try to reduce the effects of high tariffs, but it will not be easy.
“Every company is always trying to get out the next efficiency, to find a way to dial to dial or reduce inflation pressure in its operation, but 50% tariff on a commodity that is not fundamentally available in the US – you can’t really do much with it,” consumer brands have a lot of supply chain and vice -president of the logistics, a business group that represents a business group.
A mitigation strategy may be to import legumes from other countries other than Brazil, but companies will probably still be paying more for commodity.
“A characteristic of tariffs, especially when you have tariffs on several countries simultaneously, is that not only the inbound cost increases. This pricing allows the floor to grow,” Madreki said. “If you have cheap coffee in a separate country from Brazil, you are not willing to sell it at 30% lower cost. You are going to try to give your coffee a little more competition.”
Coffee brands at home like JM Smuker’s Dunkin and Craft House’s Maxwell House, already increasing their prices this year in response to the cost of commodity this year. Increase in higher price may be on the way for consumers, though Retail vendors can push back,
Kerig Dr. To reduce the impact of paper tariffs, the additional value increase in the latter part of the year would consider, CEO Tim Kofer said in late April, Trump started his early phase of so -called mutual duties.
And on his quarterly conference call in early June, the Smockers warned investors that tariffs on coffee were weighing on its profits. The company has about one third of revenue.
“Green coffee is an unavailable natural resource that cannot be grown in the continental United States due to dependence on a tropical climate,” said Mark Smker, CEO of Smockers. “We currently buy about 500 million pounds of green coffee annually, with the two biggest coffee-producing countries coming from majority Brazil and Vietnam.”
Vietnam, which announced a temporary trade deal with the White House earlier this month, supplies about 8% of the US green coffee beans. Under the agreement, the US will impose 20% duty on Vietnamese imports.
Consumers who prefer a Caramel McChyato from Starbucks for their caffeine hits will possibly see more silent effects on their purse.
After several quarters of dull American sales, Starbucks CEO Brian Nicole said in late 2024 that the company would not increase prices in 2025, in the hope of winning customers who complained how expensive its drinks were. While it waits for its change, Starbucks can choose to swallow high coffee costs.
Coffee giants also benefit from their diversity – both suppliers and the width of its menu, which now includes the popular refreshers line. Starbucks imports its coffee from 30 different countries, and about 10% of the cost of goods sold in North America comes from coffee.
New trade duty means an increase in North American costs of Starbucks by 0.5%, which comes from about 22% of the sold goods from Brazil, TD Cowen analyst Andrew Charles wrote customers in a note on Thursday. Starbucks’ packaged drinks, which are distributed by Nestle, can see that the cost of their goods has increased by 3.5%. Overall, which represents a 5-per cent drag on annual income per share according to Charles.
For rival Dutch Brothers, high coffee costs will not hurt its lower line much. The drive for coffee is less than the tenth of the cost of the goods of the coffee series. According to Charles’s estimates, more than half of its coffee coffee sources from Brazil, assuming that, assuming that, according to Charles’s estimates, its cost will increase just by just 1.3%.
