The United States announced a 50% tariff on Brazilian goods starting August 1st, prompting Brazilian President Lula to threaten retaliation at the same rate if negotiations fail, while vowing to assist businesses in finding new markets. However, US traders worry this could lead to a halt in coffee imports from Brazil, resulting in a further spike in coffee prices.

President Lula criticized President Trump for his disrespectful tariff announcement and urged domestic companies to support the government in case negotiations break down, stating that he would seek new markets for Brazilian products and encourage business leaders to align with the government’s stance.

As the largest consumer of coffee globally, the US sources one-third of its coffee from Brazil. Traders believe high tariffs may force the US to stop importing Brazilian coffee, turning instead to countries like Colombia, Honduras, and Vietnam, which cannot match Brazil's production or pricing. Global coffee prices have already surged 70% last year due to drought, and US prices may increase again, although some Brazilian coffee merchants remain optimistic that it won't come to that.

Marcio Ferreira, chairman of the Brazilian Coffee Exporters Council, stated they expect a decline in export volume but consider it manageable, expressing confidence that an agreement will eventually be reached. US Secretary of Commerce Ross mentioned last month that some natural resources that the US cannot produce, such as tropical fruits and spices, might be exempt from tariffs, but in New York’s futures market, prices for not only Arabica coffee but also orange juice imported from Brazil have already increased.