The global coffee sector continues to grapple with significant supply chain disruptions, with US tariffs specifically disadvantaging green coffee from Brazil and roasted coffee from Switzerland, the ING Group said.
While American consumers have largely been shielded from the impact so far, EU coffee roasters are now reassessing their strategies as trade flows undergo a substantial shift.
The sector remains vulnerable to the various tariffs imposed on key-producing and exporting countries.
Tariff impact
Brazil and Switzerland, ranked first and third, respectively, in terms of coffee export value to the United States, face significant tariffs of 50% and 39%.
Both countries have been actively negotiating with the US to strike a favourable deal, but the current situation has placed Swiss and Brazilian exporters at a market disadvantage.
In comparison, exporters from South America only face a 10% tariff, which gives them the edge in the US market.
US buyers are slow to adapt due to ongoing market uncertainty and the varied characteristics of coffee from different origins, ING said in its update.
Brazil’s coffee exports to the US in August fell by over 75% compared to 2024.
This early trade data suggests a shift in the market, with Brazilian traders retaining stock and farmers postponing sales, anticipating price increases, according to ING.
Meanwhile, American coffee supplies are tightening due to stable exports from Colombia and Vietnam through September.
“The disparity in tariff rates is expected to drive US buyers to reallocate sourcing away from Brazil toward more favourably taxed origins,” Thijs Geijer, senior sector economist, food & agri at ING Group, said in the update.
Roasted coffee
Canada stands as the primary exporter of roasted coffee to the US by volume, predominantly supplying decaffeinated varieties.
In terms of value, Switzerland takes the lead, with Italy ranking third.
In 2024, Swiss coffee capsule exports reached 1.1 billion EUR, reflecting consistent growth over recent years, according to the ING report.
In contrast to the more stable Italian exports, these exports experienced a sharp decline during the summer months.
“Even though coffee roasters in the EU who export to the US also face tariffs, for now, their competitive position has actually improved against Swiss competitors,” Geijer said.
US customers
Consecutive poor harvests in major coffee-producing nations have strained supplies, leading to widely reported increases in coffee prices for consumers in both Europe and America.
Coffee consumer price indexes have increased by 20% in the EU, US, and Canada, according to ING.
A shift is underway in pricing trends: while EU and Canadian prices previously rose significantly faster than in the US, this divergence is now beginning to narrow.
‘High-tariff’ coffee is not yet available in US stores, according to ING.
With a 50% tariff on Brazilian exports implemented on August 6, roasters are prioritising their current stock, the investment bank added.
The process of shipping, roasting, packaging, and distributing the coffee to retailers typically takes about a month.
Geijer noted:
So, expect the tariff impact to start hitting those retailers in the fourth quarter.
Roasters face a decision to either renegotiate prices with customers to reflect increased costs for the same quality coffee, or switch to a lower quality blend to maintain current price points, according to Geijer.
Either way, it’s not pretty for American coffee connoisseurs.
Outlook for Europe
“For the European coffee industry and consumers, these developments are a mixed bag,” Geijer said.
The impact of rising coffee prices, traded in US dollars, is being lessened by the strong euro.
“If we see more demand destruction in the US, that could release some pressure on the supply side and on prices,” Geijer noted.
But we don’t see that yet in coffee futures, which continue to trade around record highs.
This represents a small positive development: tariffs are making it more appealing for Brazilian coffee exporters to increase sales to European buyers.
Europe serves as a significant trading and processing hub for coffee, with the US being a key export market for European coffee traders and roasters.
For instance, Germany is a major re-exporter of green coffee beans to the US, while Italy and Switzerland are substantial exporters of roasted coffee.
Increased volatility and uncertainty typically present opportunities for traders to adjust to demand shifts, provided they hold suitable positions.
North American companies have gained a competitive edge over European roasters in the US due to their increased local post-tariff value-added activities.
This presents a challenge, as the US has historically been a profitable market for growth.
European roasters will need to discuss at a boardroom level how to approach the US market going forward, and whether expanding their presence or establishing new operations there is a sound strategy.
US President Donald Trump has prioritised reshoring manufacturing in strategic sectors.
“While bringing additional coffee roasting facilities may not have been an explicit goal, it could be an ultimate caffeine-rich consequence of the current tariff policy,” Geijer said.
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