Commodities traders are bracing for higher prices on coffee and orange juice should U.S. President Donald Trump make good on his threat of a 50% tariff on imports from Brazil.
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Trump’s latest threats have rattled the global coffee market and could make the price of a cappuccino much higher, warn commodities brokers and analysts. Brazil is the world’s largest grower and exporter of coffee beans, while the U.S. is its biggest client and the world’s largest consumer of coffee beverages, with nearly 200 million Americans having at least one cup a day.
Currently, the U.S. imports 33% of all coffee beans produced in Brazil each year. Some commodities traders are warning that a 50% U.S. tariff on Brazilian imports will effectively shutdown two-way trade between the countries. Analysts say, long-term, Brazil will likely look to sell its coffee elsewhere, while the U.S. will buy coffee from countries such as Colombia and Vietnam.
Record Prices
Coffee drinkers around the world, including in the U.S., are already paying record prices after last year’s 70% price surge in coffee beans caused by tight global supplies. Arabica coffee bean prices have risen another 1% over the past week since Trump made his tariff threat against Brazil.
In addition to coffee, more than half of the orange juice sold in the U.S. comes from Brazil. Orange juice futures traded on the New York Stock Exchange have jumped 6% higher on reports of Trump’s 50% tariff. Orange juice traders say they are worried about a squeeze in supplies as U.S. importers ramp-up orders to try and get ahead of Trump’s August 1 tariff deadline.
Pressuring Stocks
The U.S. has become more dependent on orange juice imports in recent years due to a sharp decline in domestic production, notably in Florida, because of crop disease and hurricane damage. A recent report by the U.S. Department of Agriculture forecast that the U.S. orange harvest would hit an 88-year low during the 2025 crop year as production of orange juice falls to a record low.
The current situation is pressuring the stocks of retail coffee companies such as Starbucks (SBUX) and Dutch Bros (BROS). PepsiCo (PEP), which is the largest orange juice producer in the U.S. through its Tropicana brand, is also being impacted.
Is SBUX Stock a Buy?
The stock of Starbucks has a consensus Moderate Buy rating among 25 Wall Street analysts. That rating is based on 13 Buy and 12 Hold recommendations issued in the last three months. The average SBUX price target of $95.45 implies 0.32% upside from current levels.
