Could Trump's tariffs on Brazil make coffee more expensive?

Summary

Marketplace Morning Report: Could Trump's Tariffs on Brazil Make Coffee More Expensive?

Release Date: August 6, 2025

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Introduction

In this episode of the Marketplace Morning Report, host Liana Byrne delves into the recent implementation of stringent tariffs by the Trump administration on Brazilian imports, with a particular focus on coffee. This decision has significant ramifications for both Brazilian exporters and American consumers, potentially altering the global coffee market dynamics.

Trump's Steep Tariffs on Brazil

Implementation and Scope

At [01:02], Liana Byrne introduces the core topic: the Trump administration's imposition of its toughest tariffs yet on Brazil. Effective immediately, a range of Brazilian goods, including coffee, will incur a 50% import tax. This marks a substantial increase aimed squarely at Brazil’s economy.

Political Underpinnings

As stated by President Trump, the tariffs are a retaliatory measure against what he describes as a "witch hunt" targeting Brazil’s former president, Jair Bolsonaro, who Trump claims is facing unjust trials for allegedly attempting a coup following his electoral loss. Bolsonaro denies these claims, framing the tariffs as foreign interference in Brazil's judicial processes.

Impact on Brazilian Exporters and American Consumers

Economic Consequences for Brazil

Ione Wells from the BBC World Service provides insight into Brazil's critical role in the global coffee market. As the world's largest coffee exporter, Brazil supplies about a third of the United States' coffee needs. The sudden imposition of a 50% tariff is expected to severely impact Brazilian businesses, increasing their costs and reducing their competitiveness on the global stage ([01:36]).

Industry Reaction and Adaptation

Guillaume Moria, a coffee analyst at Rabo Research in São Paulo, shared his perspective at [02:16]:

"Actually, we got surprised with this measure, you know, because the industry or the exporter at least was expecting that because coffee is not something planted in US. You know, probably they would put in a basket exempted from these tariffs."

Moria highlights that the lack of exemption for coffee exports has caught the industry off guard, forcing exporters to seek new markets or pivot towards local consumption to mitigate losses.

Potential Rise in Coffee Prices

The tariffs are poised to introduce volatility in global coffee prices. As Moria explains at [03:24]:

"What are you expecting in the short term? Volatility, as you could see in the New York exchange, coffee price remain fluctuating because basically American importers, basically they start to buy from other origins."

While immediate price hikes may be buffered by existing local stockpiles, Moria warns that sustained cost increases are inevitable as imports stabilize from alternative sources ([04:03]).

Broader Economic Implications

European Industrial Activity

Transitioning from tariffs, Byrne touches upon broader economic indicators in Europe. Germany's industrial orders fell by 1% in June, whereas Italy saw a 0.2% growth in industrial output, signaling a tentative recovery in its manufacturing sector ([04:25]).

Tariffs on Thailand and Supply Chain Disruptions

The discussion expands to include tariffs on Southeast Asian exports. Thailand, a significant player in the electronics supply chain, now faces a 19% import tax, a reduction from the initially threatened 36% ([04:58]). However, Jonathan Head from the BBC highlights the ongoing challenges:

"Quality is critical, but so is cost, which is why the imposition of President Trump's steep tariffs poses such a challenge." ([05:09])

Producers like Richard Han of Hanna Microelectronics express uncertainty over future investments due to the lack of detailed agreements, emphasizing the instability introduced by these rapid tariff implementations ([06:42]).

Expert Opinions

Guillaume Moria on Market Adjustments

Moria emphasizes the immediate need for Brazilian exporters to explore alternative markets and bolster local consumption to cushion the impact of the tariffs ([02:53]).

Worawat Sirupun on Trade Deal Complexities

Thai pig farmer Worawat Sirupun underscores the complexities in negotiating trade deals, pointing out that broad agreements without detailed provisions are ineffective:

"We're seeing a pattern here where Trump, you know, wants to announce the world very top line... If they're not thrashed out and agreed and I don't know how long it would take, then how can we actually implement the so-called deal?" ([06:42])

Conclusion

The Marketplace Morning Report episode effectively outlines the multifaceted impact of Trump's tariffs on Brazil, particularly within the coffee industry. With Brazilian exporters grappling to adjust and American consumers potentially facing higher prices, the global coffee market stands at a precarious juncture. Additionally, the ripple effects of these tariffs extend to other sectors and regions, underscoring the intricate web of modern international trade.

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For more insights and updates on global economic trends, stay tuned to the Marketplace Morning Report.

Transcript

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[Liana Byrne]

Your coffee could soon cost more because the US has hit the world's biggest coffee producer with its toughest tariffs yet. Good morning. This is the Marketplace Morning Report and we're live from the BBC World Service. I'm Liana Byrne. So the Trump administration's steepest tariffs yet have come in and they're coming into force against Brazil from from today, a raft of Brazilian goods, including coffee, will face a 50% import tax. President Trump says it's in response to what he calls the witch hunt against the country's former president. Here's the BBC's Ione Wells in Sao Paulo.

[Ione Wells]

Brazil is the world's largest coffee exporter and provides about a third of the US's supplies. The decision will hit both Brazilian businesses and American coffee drinkers. Financially. What's unique is these tariffs are almost entirely political. President Trump has attributed them to the trial of the right wing former president of Brazil, Jair Bolsonaro, who's facing trial for attempting a coup after losing the last election, something he denies. Mr. Trump has called it a witch hunt. Brazil's government has slated what it's described as foreign interference towards Brazil's judiciary Ione wells there.

[Liana Byrne]

For more on the impact, I spoke to Guilami Moria, a coffee analyst of Rabo Research in Sao Paulo, and I started by asking how the industry was reacting.

[Guillaume Moria]

Actually, we got surprised with this measure, you know, because the industry or the exporter at least was expecting that because coffee is not something planted in us. You know, probably they would put in a basket exempted from these tariffs. And for sure, comparing to other competitors, you make us lose in competitiveness against the other players around the globe.

[Liana Byrne]

So how are Producers going to deal with that though, Are they considering shifting their exports elsewhere? Will they have to absorb some of that cost?

[Guillaume Moria]

Right now where we are seeing here in Brazil, especially from the exporter side, of course we are not doing new deals. You know, we can say that the new negotiations are paralyzed. And of course, given that this current context, we are looking for new alternatives. When I say new alternatives, we are basically wanting to send this coffee for other regions, of course, but also leave this coffee for the local consumption.

[Liana Byrne]

So what is going to happen to coffee prices globally? Because Brazil's arabica and robusta, it essentially sets the price of coffee globally, doesn't it?

[Guillaume Moria]

Yeah, exactly. What are you expecting in the short term? Volatility, as you could see in the New York exchange, coffee price remain fluctuating because basically American importers, basically they start to buy from other origins. Because of that, we see sometimes coffee prices increasing a little bit.

[Liana Byrne]

Can we expect this to happen immediately, that people will feel that at the prices when they go buy their coffee, or will it take a couple of months to filter through?

[Guillaume Moria]

Probably going to take a while until the consumer feel this increase in prices because there is a certain level of local stocks. So probably the roasters, importers have a certain level of stocks that they can use in a short period, but in the long term, definitely the roasters has to pass it to consumers if nothing change.

[Liana Byrne]

Guillaume, Maria, thank you so much for joining us on Marketplace.

[Guillaume Moria]

All right, thank you very much.

[Liana Byrne]

Now let's do the numbers. Germany, Europe's largest economy, saw its industrial orders fall by 1% in June compared to the month before. But Italy's industrial output surprisingly grew by 2/10 of a percent in the same period. It's a tentative sign of recovery for its manufacturing sector. Alright, let's go back to tariffs because Thailand managed to dodge the worst of them.

[Ione Wells]

But it's not completely off the hook.

[Liana Byrne]

From midnight tonight, products coming in from the Southeast Asian exporter will face a 19% import tax. That's a lot better than the 36% President Trump once threatened.

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But.

[Liana Byrne]

But for an economy built on high volume, low margin goods, it's still going to hurt. The BBC's Jonathan Head reports.

[Jonathan Head]

I'm standing now in a large room filled with machinery that is stamping circuit boards, little tiny components, bits of solder being imprinted on these typically green circuit boards. And passing down, to be inspired, expected. This one factory is part of an enormously complicated supply chain that stretches across Asia and eventually to the US and Europe. Quality is critical, but so is cost, which is why the imposition of President Trump's steep tariffs poses such a challenge.

[Richard Han]

But the US has been making tough demands in return for cutting tariffs, in particular access to Thailand's agricultural market. Pig farmers like Worawat Sirupun have been lobbying their government hard not to lift barriers to US pork. American farmers produce on a much larger scale than us, he told me, and their costs are much lower. We can't survive if we allow their pork into Thailand. Richard Han is the CEO of Hanna Microelectronics. But even with a deal says there's still too much he doesn't know to make any plans to invest or move production to another country.

[Worawat Sirupun]

We're seeing a pattern here where Trump, you know, wants to announce the world very top line. We've got a deal and this is the key elements. 40%, 20%, whatever it is, but because there's no detail, then it's not really a deal because there's so many details that need to be part of that deal. If they're not thrashed out and agreed and I don't know how long it would take, then how can we actually implement the so called deal?

[Richard Han]

This is a point those involved in the tariff talks have often echoed. These deals have been so rushed that all the usual minute detail that goes into trade agreements which typically take years to finalise is is missing. In fact, these deals are essentially just verbal agreements on a few big numbers, which could easily change again if President Trump has a mind to do so. In Bangkok, I'm the BBC's Jonathan Head for Marketplace.

[Liana Byrne]

And that's it from the Marketplace Morning Report from the BBC World Service, I'm Liana Byrne. Have a great day. Thanks for listening.

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