Tariffs imposed by US President Donald Trump on Brazilian products have led to a 67% decline in Brazilian shipments of specialty coffee to North America.
Trump announced an additional 50% tariff on Brazil in July, effective the following month, when the country’s total sales fell by 16.5%. In September, the decline was 20.3%.
The United States is responsible for moving about 2 million bags of premium coffee, out of the 10 million bags the country exports, according to the Brazilian Specialty Coffee Association (BSCA).
With the adoption of the tariffs, of the approximately 150,000 bags on average exported monthly to states such as California, New York and Oregon, the total fell to 50,000 bags.
The specialty coffee is the most valuable produced in the country, and the price of a 60 kg bag easily exceeds R$3,000, according to producers who participated in the last week of SIC (International Coffee Week), the main event linked to coffee growing in the country and which was held in Belo Horizonte.
“The impact has been huge, because we are basically talking about a 67% drop in shipments of high-value-added coffee that was severely affected by the tariffs. So, what are the expectations of importers? They have received signals that the tariffs need to be resolved. So, what is happening? It is delaying shipments and eating up stocks,” said Vinicius Estrela, executive director of the BSCA.
The executive assesses the moment as “very delicate” given that coffee is a product with a short marketing window, but said he sees the negotiations between the Brazilian and North American governments as positive.
“If the agreement is delayed and does not happen this year, (coffee) will likely lose an important part of the American market and give the American consumer the opportunity to test and eventually adapt to other coffees. It has been a struggle for Brazil, and the BSCA, for more than 30 years, to show that Brazil was not just basic coffee.” Major competitors include Colombia, Panama, Ethiopia, Kenya and Indonesia.
The alternative found by Brazilian exporters is to strike a deal with North American buyers to minimize losses on both sides. This is what Três Corações, the main player in the national market, did, according to its president, Pedro Lima.
“We exported some coffee to the American East Coast, lowered our prices, and the distributor there reduced his margin a little and raised the price a little,” Lima said. “It was a three-way equation there, and we continued to export (…) We agreed there, but we did not stop any business.”
Celerio Inácio da Silva, Executive Director of the Brazilian Coffee Industry Association (Abic), stated that it is urgent to reconsider tariffs and that the sector has adopted a new strategy regarding negotiations, demanding that the tariff imposed on coffee be resolved separately from other products affected by the tariff.
“It should be discussed separately for several reasons. The first is that in coffee there is no obstacle, neither on the part of the United States nor on the part of Brazil. Second, if Brazil starts with a product, it shows at least good faith. The United States also shows good faith. Say, okay, we start negotiating,” he said.
The journalist traveled at the invitation of SIC (International Coffee Week)
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