Traders race to ship coffee to the US - Ahead of 50% tariff to take effect on August 1
Traders are racing against time to sell as much Brazilian coffee as possible in the United States before Trump's new 50% tariff on Brazilian products goes into effect on August 1.
Recently released data showed that U.S. consumer prices rose in June as the cost of the Trump administration's tariffs began to add up, including on coffee.
Some traders are diverting ships mid-voyage, canceling stops at other ports so that containers filled with Brazilian coffee can enter U.S. ports without paying the 50% tariff.
Others are shipping Brazilian-origin coffee from warehouses in neighboring countries like Canada or Mexico to the U.S. market, destined for use there. Meanwhile, U.S.-based importers are already publishing wholesale prices that include the 50% surcharge for any shipments arriving after August 1. There is no alternative solution for coffee that has not yet left Brazil.
Brazil produces a third of all the coffee consumed in the U.S., both as a single origin and as the basis for most blends sold in the world's largest coffee-consuming country. The U.S. produces only about 1% of the coffee consumed domestically.
Coffee prices in the US have risen sharply after a 70% surge in the market last year caused by production shortages. If implemented, a new 50% tariff on imports from Brazil, announced last week, will trigger a wave of price increases, market participants say.
Traders said that if the tariff stands, coffee flows on the global market will be reorganized, with Brazilian coffee going to Europe and Asia, and the US buying more from Africa, South and Central America.
This change is not easy and will cost importers more, they said.
The National Coffee Association in the US said that "coffee is an integral part of the daily lives of Americans and the American economy," noting that two-thirds of American adults drink coffee every day. The association has urged the Trump administration to exempt coffee from tariffs on Brazil.
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