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KEY TAKEAWAYS
- The 50% tariffs on imports from Brazil that are set to go into effect next month likely will raise orange juice and coffee prices for U.S. consumers.
- Brazil supplies a significant portion of the U.S. market for those commodities, and limited supply alternatives exist.
- Prices for future deliveries of orange juice and coffee have surged in the wake of the tariff announcement from President Trump.
Plan on spending more for breakfast beverages in the near future.
The Trump Administration’s 50% tariff on Brazil—announced July 9 and set to take effect at the start of August—targets a country that accounts for an estimated 75% of global orange juice exports and more than half of all orange juice sold in the U.S.
Coffee drinkers won’t be spared. The world’s largest coffee producer, Brazil supplied about 30% of all coffee beans imported to the U.S. last year.
Prices for both commodities have surged since the administration’s announcement. Frozen concentrated orange juice prices for future delivery have surged more than 10% in the last week, and coffee prices have increased 6%.
No Easy Alternatives
Particularly for orange juice, surging prices in the wake of the tariff announcement reflect a simple reality: Few alternatives exist to replace Brazilian supplies.
That’s in large part because U.S. orange production has dropped substantially in the past two decades. Weather challenges facing Florida and Texas orange groves, labor shortages, and a devastating citrus disease all have contributed to the decline.
In the past 20 years, acreage devoted to U.S. orange production has fallen 50%. Production from Florida, the largest-producing U.S. state, has plummeted nearly 90% over the same period.
More alternatives exist that could ease the impact on coffee drinkers. Colombia supplies about 20% of the U.S. coffee market, while Guatemala, Honduras, Peru, and Vietnam each account for about 5%. But those countries also face tariffs that could boost import costs and, ultimately, prices paid by consumers.
In addition, coffee drinkers using sugar could get hit twice. Brazil is the world’s largest sugar producer; its shipments to the U.S. are subject to a quota exempt from import taxes. It’s not clear how the new tariff would affect that quota, but any supplies exceeding it presumably would face the full 50% levy. Prices for future sugar deliveries have risen 6% in the last month.
