Trump's tariffs hit Americans' favorite drink. Europe may benefit from them

 

"The first US tariffs on coffee imports since colonial times will increase costs for importers and processors, who are already struggling to cope with prices close to record highs. Europe, on the other hand, may benefit from the coffee tariffs.

 

The United States announced tariffs of 46 percent on imports from Vietnam, the world's second-largest coffee producer, on Wednesday, as well as a 32 percent tariff on coffee imports from Indonesia, the fourth-largest producer. Coffee growers from Central and South America, such as Brazil and Colombia, have been hit with tariffs of 10 percent, Reuters recalls.

 

How much will coffee prices in the US increase?

 

Vietnam is the third largest supplier of coffee to the United States, the world's largest consumer of this drink. It mainly exports robusta coffee, commonly used to produce instant coffee, as well as ready-to-drink cold drinks.

 

“Vietnam is the one that stands out,” said Tomas Araujo, a broker at StoneX, a research firm. “It will be a big challenge for the supply chain and end users in the future, with additional costs,” he added.

 

The tariff on Vietnam means an additional $2,500 per tonne for the American buyer, brokers calculated.

 

Robusta futures ICE, a global price benchmark, were trading at around $5,390 per tonne on Thursday.

 

It is unclear whether beans already shipped to the United States will also be subject to the new tariffs, Reuters reported.

 

Trump’s tariffs will also affect cocoa beans

 

Cocoa-exporting countries, a key ingredient in chocolate, have also been hit. The largest producer, Ivory Coast, has been hit with tariffs of 21 percent. “Both the coffee industry and the confectionery industry will lobby hard to remove the tariffs on these products,” said Judith Ganes, soft goods analyst and president of J Ganes Consulting. “I personally doubt the tariffs will stay,” she added.

 

U.S. coffee processors will likely have to switch from Vietnamese robusta to Brazilian varieties known as conilons, experts say. But Brazil doesn’t have many robusta plantations because it mainly produces the milder Arabica variety.

 

Europe to benefit from Trump’s coffee tariffs

 

The United States will have to compete for exports with the domestic Brazilian industry. Europe and China, on the other hand, could benefit from Trump’s coffee tariffs because they can count on more supplies from Vietnam at lower prices.”