By Kirk Maltais

President Trump's 50% tariff on Brazilian goods is likely to lift the price of the preferred coffee for most U.S. consumers.

Brazilian arabica beans are the source for roughly 35% to 40% of the coffee consumed in the U.S. A levy on imports starting Aug. 6 would increase the price of coffee in cafes and grocery stores alike.

Brazil is by far the leading producer of coffee worldwide. It is expected to produce a total of 65 million bags of beans in the 2025-26 marketing year -- more than double the next-largest producer, Vietnam -- the Department of Agriculture estimates.

At more than 40 million bags, Brazil produces more arabica coffee than the next five leading producers in the world combined. This includes such countries as Colombia and Honduras, where U.S. coffee makers already buy a large portion of their output.

"We don't have an easy ability to replace Brazilian coffee," said James Watson, senior beverage analyst with Rabobank. "For the most part, most of what you drink is all arabica."

Vietnam is the next leading coffee producer in the world, but produces virtually no arabica coffee. The country is forecast to produce 30 million bags of robusta coffee in 2025-26. Robusta is a cheaper type of coffee that is more commonly used in instant coffees. A number of brands sold in grocery stores are made using a mix of arabica and robusta.

The ability of U.S. roasters to switch out Brazilian coffee for a different exporter is limited. Some are owned by such companies as JM Smucker and Kraft Heinz. Domestic production is small, with the U.S. importing 99% of its coffee needs through 2024. Hawaii, California and Puerto Rico are the only places in the U.S. that produce any amount of coffee.

That leaves coffee roasters with few alternatives. Companies might look to alter their recipes for the blends they produce, or simply swallow higher prices coming from tariffs.

In June, JM Smucker -- whose brands include Folgers, Dunkin' and Café Bustelo -- said it raised prices for its coffee in May, and will do so again in August. That call was held before the tariff on Brazil was announced by Trump.

The coffee supply chain has proceeded tentatively after Trump's tariff threat in July. Companies have done business without knowing that the 50% tariff will be implemented. Traders have rushed to bring more coffee into the U.S. ahead of a tariff, directing it away from other countries, Citi Research said in a note.

"The real effect you're seeing is that supply chains are locking up," said Tomas Araujo, a trading associate with StoneX Group.

The White House released its notice confirming that tariffs had been raised to 50% on Wednesday. The notice exempts numerous goods, including orange juice and industrial metals. Coffee wasn't listed among those goods.

Coffee futures trading on the Intercontinental Exchange had been on a downturn in recent months, coming off a record high of $4.29 a pound hit in February. Coffee futures were among the top-gaining commodities in 2024 because of drought hitting Brazilian crops. But the weather has since improved, sending the futures contract down 35%.

Importers are expected to charge buyers more to ship the coffee, which domestic roasters in turn might pass on to consumers.

Without tariffs, prices of coffee futures would otherwise be expected to slide. Coffee crops in Brazil have been receiving more rainfall, which is boosting production estimates for the 2025-26 marketing year, according to USDA data.

Retail prices for coffee run roughly six months behind the changes in futures prices. So consumers are still feeling the impact of futures rising to all-time highs earlier this year. Year to date, the average retail price for a cup of coffee in U.S. cities has risen 9% in 2025, according to the U.S. Bureau of Labor Statistics.

Retailers were hoping to pay less for coffee as futures prices slid, said Watson. But with tariffs in play, both futures and retail prices will likely see no respite.

Write to Kirk Maltais at kirk.maltais@wsj.com

(END) Dow Jones Newswires

July 30, 2025 19:45 ET (23:45 GMT)

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