U.S. Tariffs on Brazil Escalate Trade Tensions, Coffee Sector Feels the Heat

By Buna Pulse | Addis Ababa, Ethiopia | August 1, 2025

The United States has imposed a steep 50% tariff on Brazilian imports and announced sanctions against a Brazilian Supreme Court justice, escalating diplomatic tensions between the Western Hemisphere’s two largest economies. The move has sent waves through global markets — with the coffee industry among the sectors watching most closely.

Brazil, the world’s largest coffee producer, exports an average of 800,000 bags of coffee to the U.S. each month. The new tariff, effective August 7, could add an estimated $1.50 per pound to the cost of Brazilian coffee, significantly affecting U.S. roasters and potentially shifting trade flows globally.

The Brazilian Coffee Exporters Council (Cecafe) has confirmed ongoing negotiations with U.S. trade officials to exempt coffee from the tariff list. However, no agreement has been reached yet.

Ethiopian Perspective

For Ethiopia — the birthplace of Arabica coffee and one of the world’s leading specialty coffee exporters — the tariff dispute presents both opportunity and uncertainty. While Brazil faces barriers, Ethiopian exporters may benefit from heightened demand in the U.S. market. But with Ethiopia’s own challenges around logistics, certification (including EUDR compliance), and fluctuating weather, the window to respond competitively is narrow.

“Whenever large producers face trade disruptions, the world looks to origins like Ethiopia,” said an Addis Ababa-based exporter. “But readiness and traceability are key if we want to meet that demand.”

Broader Tariff Shakeup

The 50% tariff on Brazil is part of a broader U.S. trade overhaul that introduces a new 15% minimum tariff on imports from countries where the U.S. runs a trade deficit. Over 20 nations — many of them coffee exporters — will face higher rates:

• Brazil: 50%

• India: 25%

• Vietnam: 20%

• Indonesia: 19%

• Nicaragua: 18%

• Costa Rica, Papua New Guinea, and Uganda: 15%

Mexico, meanwhile, has been granted an extension on its tariff exemption under the USMCA, keeping its goods — including coffee — tariff-free for now.

Hope for Exemption

In a statement that has stirred cautious optimism in the coffee world, U.S. Commerce Secretary Howard Lutnick said that natural resources not produced in the U.S., such as coffee and cocoa, may be exempted from import tariffs as part of future bilateral agreements.

It is the first time a U.S. official has directly addressed the possibility of excluding coffee, raising hopes that long-term deals could offer protection for producing nations.

Outlook for Ethiopia

As the global coffee trade braces for turbulence, Ethiopia has an opportunity to further position its premium Arabica coffees in the U.S. and European markets. But success will depend on fast action, certification readiness, and strong supply chain partnerships.

Buna Pulse will continue to monitor the developments and their implications for Ethiopia’s coffee sector.