For centuries, Brazil's coffee farms have weathered storms, both literal and economic. But a new challenge is brewing: a 10% U.S. tariff on Brazilian coffee imports, set to take effect as the industry grapples with the aftermath of a devastating drought and record-high arabica prices. This marks the first major tariff imposition on coffee since colonial times, according to trade analysts.
At a family-run coffee farm in Minas Gerais, the mood is somber. "We've survived bad harvests before," said one grower, "but tariffs on top of drought? This could break small producers." Brazil supplies over 40% of U.S. coffee imports, with arabica beans—the preferred variety for premium brews—now trading near historic highs of $2.40 per pound.
The timing couldn’t be worse. Last year’s drought reduced yields by 30% in key regions, and recovery remains slow. The new tariffs could raise U.S. retail prices by 7-10%, risking demand contraction in America’s $100 billion coffee market. Investors are monitoring how Brazilian exporters might absorb costs versus passing them to consumers.
CGTN’s Lucrecia Franco reports that growers are exploring strategies like diversifying export markets and investing in drought-resistant crops. Yet uncertainty looms: "This is uncharted territory," a São Paulo trade official noted. For global markets, the situation underscores how trade policies can amplify climate-driven disruptions, reshaping supply chains overnight.
