There is speculation that U.S. tariff pressure on Brazil, the world's largest coffee producer, could ripple across the coffee market. As the U.S. government considers imposing a 25% tariff on Brazilian instant coffee, concerns are growing that importers and manufacturers will face higher expense burdens, which could in turn lead to higher consumer prices.
On the 7th (local time), Reuters reported that as the U.S. government reviews imposing a 25% tariff on Brazilian instant coffee, the coffee industries in Brazil and the United States have warned of fallout from the tariff. The industry noted that given the United States' high dependence on imports, it will be difficult to change suppliers in the short term, and the tariff burden could ultimately be passed on to consumers. Brazil is a major supplier to the U.S. instant coffee market.
The Office of the United States Trade Representative (USTR) is considering imposing a 25% tariff on Brazilian products under a Section 301 investigation. The list includes regular instant coffee.
The United States has a high reliance on instant coffee imports. According to the Brazilian Instant Coffee Industry Association (ABICS), Brazil supplies more than 20% of U.S. instant coffee imports. By contrast, the share of instant coffee produced in the United States is less than 6%, leading to concerns that securing alternative suppliers quickly after tariffs are imposed would be difficult.
Rising instant coffee consumption in the United States is another factor heightening concerns about price pressure. According to the National Coffee Association (NCA), the share of consumers in the United States who drink coffee daily and choose instant coffee rose from 6% in 2021 to 11% recently.
Industry officials believe that if tariffs become reality, importers and manufacturers will face higher expense burdens, which could ultimately affect consumer prices. Agnaldo José de Lima, an ABICS executive director, said, "The shock of additional tariffs will show up first for corporations and jobs," adding, "The increase in expense will ultimately be passed on to consumers."
The Brazilian coffee industry, the U.S. coffee association, and others opposed the tariffs at a USTR public hearing held in Washington on the 6th and 7th. They argued that because coffee is a product U.S. consumers use daily, the tariff burden could translate into pressure on the cost of living.
The Brazilian coffee industry is also questioning the criteria for applying the tariffs. While Brazilian regular coffee and flavored instant coffee were included in the tariff exemptions, regular instant coffee was left out. The industry's position is that there is no reason to treat regular instant coffee differently within the same coffee product category.
The industry also fears that this tariff review could serve as a trigger for the Trump administration's trade policy influence to spread beyond manufacturing to food supply chains and consumer goods markets. With volatility in coffee materials and supplies prices already heightened, imposing additional tariffs could increase importers' and manufacturers' expense burdens and affect consumer prices. In particular, if trade tensions persist between Brazil, the world's largest coffee producer, and the United States, a major consumer, uncertainty surrounding the global coffee market is expected to grow.