When Might 25 Cents Mean More Than 9 Million Dollars?

With a 50% Trump tariff on Brazil’s exports, a cup of coffee could cost 25 cents more in three months. Meanwhile the price of an Embraer airplane will (probably) soar by a whopping $9 million.

I suspect (for a daily coffee buyer), at $1.25 more a week, $5 more a month, and $60 more a year, we will care more about the coffee hike than the jet.

Brazil Tariffs

Coffee

During December (2024), WSJ told us that coffee futures had hit all time 47-year highs. The reason was the weather when a steep price jump began after a severe Brazilian drought during August and September. Then, making it worse, Brazil had heavy rains in October that might have withered the crop. Now, further exacerbating the coffee crisis, a 50 % tariff, on August 1, could further elevate what we pay for a cup of coffee and our bag of beans.

According to Reuters, close to 200 million Americans have a cup of coffee each day. At 8.14 million 60 kg bags (equal to 120 pound-bags of coffee) in 2024, close to one third of our total coffee consumption came from Brazil. So, when a tariff changes the incentives, the impact is unpredictable. Or, as one coffee broker explained, “A tariff of this size would all but shut down that flow. Brazilian exporters won’t absorb it. U.S. roasters can’t…”

However, we can expect that coffee prices will rise:

We also could expect China and Brazil to pull closer. Citing a pivot to China (its biggest trade partner), Brazil sent 186.1 percent more coffee to them last year.

Airplanes

At the same time, close to 60% of Brazil’s airplane exports wind up in the U.S. According to the Brazilian Minister of Ports and Airports, per plane, the tariff uptick could be $9 million.

Our Bottom Line: Unintended Consequences

We just do not know how a whopping 50% tariff will affect coffee and airplanes. Ranging from new trade partners, to lower supply, to less quantity demanded, the list of possibilities is long.

But, returning to our title, we will care if our daily coffee cup costs more.

My sources and more: For coffee prices and trade, a slew of articles were possibilities. From last December, WSJ had the story of the initial price hike. Then, recently Coffee Intelligence, Reuters, and the NY Times had up-to-date coffee facts. As for Brazilian airplane imports, this aviation site introduced Embraer and its customers.

Please note that two of today’s sentences were in a past econlife post.