Your coffee just got expensive as Trump launched tariff war on Brazil over Bolsonaro ‘witch hunt’

Coffee futures climbed sharply on Thursday (July 10) after former US President Donald Trump threatened to impose 50 per cent tariffs on Brazilian imports, raising concerns about global supply and the prospect of higher prices for American consumers.

In a letter posted to his Truth Social platform on Wednesday (July 9), Trump accused the Brazilian government of suppressing free speech and launching a “witch-hunt” against former right-wing president Jair Bolsonaro. He said the US would apply the steep tariff from August 1.

Arabica coffee prices on the New York exchange rose more than 3.5 per cent on Thursday morning in reaction to the announcement. Brazil is the world’s largest producer of arabica coffee, which is commonly used in premium blends.

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The letter is “sending shockwaves across the coffee industry,” Financial Times quoted one trader as saying. “The US is Brazil’s main coffee buyer, so this tariff will certainly hit sentiment.”

Giuseppe Lavazza, chair of Italy’s Lavazza Group, which owns the Lavazza coffee brand, had warned earlier this week of the risks tariffs posed to the industry. Speaking before Trump’s Brazil announcement, Lavazza said the US’s 10 percent tariff on EU goods was “fine,” but levies on coffee producers such as Brazil and Vietnam would present a serious challenge.

“The problem is not to have tariffs between America and Europe,” Lavazza said. “The problem is to have tariffs between US and Brazil, US and Vietnam, US and all the countries where coffee is produced. The final outcome will be a rise in the cost of coffee in the US. So the US market becomes more expensive for consumers.”

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Coffee prices have surged in recent years due to poor harvests in Brazil and Vietnam, the world’s top growers, coupled with speculative investment in the market. London robusta futures, the global benchmark, hit a record high of nearly $5,700 per tonne earlier this year, a significant jump from the historical average of $1,700.

Prices for arabica beans also surged 70 per cent last year, reaching $4.20 per pound, but have eased recently on expectations of improved harvests.

Despite that, Trump’s tariff threat could reverse the trend and rekindle inflationary pressures in the coffee market, analysts said.