How New Tariffs on Brazil Could Impact US Coffee Companies, Consumers

Abena Bediako | July 21, 2025, 8:11 pm

Trouble could be brewing for coffee drinkers and the coffee industry.

President Donald Trump is threatening to impose a 50% tariff on Brazil, the world’s largest coffee producer and the source of 30% of U.S. coffee imports.

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The announcement comes in response to the Brazilian trial of former President Jair Bolsonaro, who is charged with trying to overturn his 2022 election loss. Trump called Bolsonaro a friend and described the trial as a “witch hunt.”

The looming tariff threat sent a wave of trepidation through the coffee industry, especially small business owners already competing with larger conglomerates like Starbucks.

Americans’ coffee habit depends almost exclusively on imports. Government data shows Brazil supplies about 30% of the American market, followed by Colombia at roughly 20% and Vietnam at about 10%. Global stocks are now low due to climate-related pressures that have recently strained coffee prices.

According to the National Coffee Association, the Consumer Price Index (CPI) for urban coffee prices is up almost 12% over the last year, and the cost of a pound of coffee has risen by 74% over the past five years. This may be impacted by a variety of supply-and-demand factors.

“We source coffee from primarily Brazil and Colombia for our blend, and we would get samples from different co-ops,” said Vladimir “Vova” Kagan, co-founder of Sputnik Coffee Company.

Kagan and his brother started their business more than eight years ago when they noticed the price for craft coffee was getting high.

“We were always looking for options for home brewing that were more affordable, but also were quality blends and quality roasts,” Kagan said.

They got their start in a friend’s basement in Logan Square working on an old-school roaster machine serving their family and friends. As they’ve grown further into the industry, Kagan has noticed a change of tides in the coffee scene.

“I would say it was very competitive,” Kagan said. “There was a lot of equipment opening up, and new manufacturers making various equipment, and it was getting easier. There was competition, but our price point and our quality, we were able to get customers that like the blend and love the coffee. But now you do see a lot of places closing up. There’s a lot of coffee roasting equipment that went up for sale in the last 12 months.”

Marcos Matos, executive director of Cecafé, Brazil’s coffee exporters council, said the initial 10% tariff imposed by Trump in April was not as catastrophic as some of Brazil’s competitors faced even higher rates. Vietnam, for example, began with a 46% tariff, now reduced to 20%. He sees the proposed increase to 50% as a serious escalation.

The tariffs on imports from Brazil aren’t set to begin until Aug. 1; however, the Trump administration has a tendency of announcing tariffs and then rolling them back. The process of purchasing a container of coffee, shipping it and storing it gets expensive.

“If you find what you like, you want to buy as much as you can,” Kagan said. “But it all comes down to cash flow. A container of green coffee is almost 150 to 200K. They still need to be stored. They need to be moved around. They need to be roasted. And then if you’re doing blends, two containers at a time, that’s almost half a million dollars of our inventory.”

Kagan notes that within the last year the industry has seen a major increase in pricing. Coffee being traded as a commodity causes the cost of beans to depend on where the market is.

“In the past six months, we’ve been not only paying double what we used to be paying for the coffee, but 10% on top of that,” Kagan said. “And the real problem is it makes securing supply very challenging, because those large conglomerates, anybody with means, immediately secures as much coffee as they can physically take.”

The ripple effect of additional tariffs will trickle down to customers. Some experts predict if the tariffs go through on Aug. 1, it will only take a few months before customers feel price increases at local cafes and restaurants.