Coffee prices climb after Donald Trump threatens 50% tariffs on Brazil

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.Espresso futures jumped on Thursday after US President Donald Trump threatened 50 per cent tariffs on Brazil, the world’s largest producer, jolting the business and risking a value surge for US customers. In a letter posted to Fact Social on Wednesday, Trump mentioned the US would hit Brazil with the steep tariff fee from August 1, accusing the nation’s authorities of attacking free speech and orchestrating a “witch-hunt” in opposition to Brazil’s former rightwing president Jair Bolsonaro.Arabica espresso costs buying and selling in New York climbed greater than 3.5 per cent on Thursday morning in response to Trump’s risk, earlier than paring features to commerce round 2.5 per cent increased. Brazil is the world’s high producer of arabica espresso, which is utilized in higher-end brews. The letter is “sending shockwaves throughout the espresso business”, mentioned a dealer. “The US is Brazil’s predominant espresso purchaser, so this tariff will definitely hit sentiment.”Giuseppe Lavazza, chair of Lavazza Group, which owns Lavazza espresso, mentioned on Wednesday forward of Trump’s risk to Brazil that the US levy of 10 per cent on EU items was “superb”, however tariffs between the US and coffee-producing international locations resembling Brazil and Vietnam can be more difficult for espresso corporations and would push up costs for American customers. “The issue is to not have tariffs between America and Europe. The issue is to have tariffs between US and Brazil, US and Vietnam, US and all of the international locations the place espresso is produced,” mentioned Lavazza. “The ultimate end result will likely be an increase in the price of espresso within the US. So the US market turns into dearer for customers.” Costs of arabica and robusta espresso have been sturdy over the previous few years as poor harvests on the planet’s predominant rising international locations, Brazil and Vietnam, have lowered provides and speculators have piled into the market. London robusta futures, the worldwide benchmark, reached a document excessive of practically $5,700 a tonne earlier this yr, up from a historic common of $1,700, whereas the value of higher-end arabica espresso beans rose 70 per cent final yr to $4.20 a pound. However costs of arabica and robusta have fallen again from their highs in latest months on hopes of improved harvests.Oran van Dort, a commodity analyst at Rabobank, mentioned the market hoped the Trump administration would carve out tariff exemptions for merchandise not simply grown within the US, resembling cocoa and low beans. “In 2024, the US imported roughly 34 per cent of its complete inexperienced espresso from Brazil. Subsequently, if espresso just isn’t exempted, the brand new tariff would have a big influence,” he mentioned.Van Dort added that international locations producing robusta espresso, resembling Vietnam and Indonesia, are additionally topic to US tariffs from August. “Consequently, the market will carefully monitor potential commerce offers — resembling Vietnam’s settlement or a potential espresso exemption.”Video: Can scientists develop a espresso bean extra proof against local weather change? | FT Meals Revolution