Rising Tensions in the Coffee Market
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According to a Bloomberg survey of brokers, exporters, and roasters, U.S. buyers are avoiding new green coffee contracts with Brazil after the Trump administration imposed a 50% tariff on Brazilian coffee imports starting August 6.
The global arabica coffee market surged in August, with ICE exchange prices climbing by more than 30%, largely due to the tariff, said Marcio Ferreira, president of Brazil’s Coffee Exporters Council (Cecafe).
“The tariff increase has created instability, pushing global coffee prices higher, and the market still hasn’t found a ceiling,” Ferreira noted.
Brazil’s Output Challenges
Brazil, the world’s largest coffee producer and exporter, is facing additional supply pressures.
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The 2025 arabica harvest, now nearing completion, has yielded about 10% less than expected.
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Frosts earlier this month may further reduce next year’s output.
This weak harvest adds to market uncertainty, making prices even more volatile.
U.S. Buyers Look Elsewhere
With tariffs in place, U.S. roasters are shifting to Central America and Colombia for supply. However, these alternatives come with added premiums, making them costlier than ICE futures contracts.
Ferreira also highlighted increased speculative activity:
“The instability has attracted investment funds, creating a favorable environment for speculation.”
Europe and Asia Boost Demand
While U.S. demand for Brazilian coffee has weakened, European and Asian demand has surged beyond expectations. Germany, in particular, plays a key role in re-exporting processed coffee to the U.S., where tariffs are lower on European goods.
Denmark to Abolish Coffee Tax
In a related development, Denmark plans to phase out its coffee and confectionery taxes, which date back nearly a century.
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The tax will be cut in half in 2026.
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It will be fully abolished by 2027, saving Danish consumers an estimated 2.4 billion kroner (USD 372 million).
“By abolishing these taxes, we are returning money to Danish households and making business easier by removing unnecessary bureaucracy,” said Denmark’s Deputy Prime Minister and Liberal Party leader.