Trump’s 50% Brazil Tariff Threat Sends Coffee Prices Brewing Higher

Your morning cup just got caught in a geopolitical crossfire. Trump’s threat to slap 50% tariffs on Brazil — the world’s largest arabica producer — sent coffee futures jumping over 3.5% Thursday morning. The move targets Brazil over alleged attacks on free speech and what Trump calls a “witch-hunt” against former president Jair Bolsonaro, with the tariffs set to kick in Aug. 1. One trader told FT, “The US is Brazil’s main coffee buyer, so this tariff will certainly hit sentiment.”

• Arabica prices have already surged 70% last year to $4.20 per pound, while London robusta futures hit record highs near $5.7K per tonne earlier this year (triple the historical average).
• Lavazza’s Giuseppe Lavazza warned that US tariffs on coffee-producing nations like Brazil and Vietnam would be “more challenging” than EU levies, pushing costs higher for Americans.

Brewing trouble: Lavazza blames hedge funds for “80%” of recent price volatility, claiming speculators created “unbelievable” market swings that forced his company to triple its coffee purchasing budget last year. While prices had recently retreated from peaks on hopes of better harvests, Trump’s Brazil gambit threatens to reignite the rally just as the industry was catching its breath. With consumption already down 3.5% over two years due to high prices, American coffee lovers may need to brace for an even more expensive caffeine fix.