Reciprocal tariffs are scheduled to take effect on Friday, which includes major global coffee producers like Brazil and Vietnam (and now India). Tariff rates range from 20% to 50%, and coffee is currently part of the list of imported goods impacted. But relief may be on the way. For the first time, a member of the Trump administration has stated publicly that coffee may be eligible for an exemption.
As reported by Yahoo Finance, the announcement came from US Commerce Secretary Howard Lutnick. During an interview on CNBC’s Squawk Box, Lutnick stated that the president “has agreed to set zero tariffs for those natural resources that are not grown in the U.S.” Among the commodities mentioned as potentially being exempt from the reciprocal tariffs are things like mangos, pineapples, cork, cocoa, and coffee.
Lutnick points to the deal struck with the European Union and language in the deal with Indonesia as evidence. Cork, he notes, can come in from Europe with no tariff, while the “Agreement on Reciprocal Trade between the United States and Indonesia” that establishes a 19% tariff on all Indonesian imports carves out an exemption for “certain commodities that are not naturally available or domestically produced in the United States for a further reduction in the reciprocal tariff rate.”
Coffee is currently beholden to the 19% tariff.
There is a catch, though. The potential exemptions for natural resources will only be exercised once a trade deal has been reached with the producing country. And as seen in the Indonesia deal, they will have to be worked out after the fact.
Complicating things further for the coffee industry in particular is that the status of the 50% tariff on all Brazilian goods, which Yahoo Finance notes Lutnick “did not comment on.” There’s a belief that the tariff on Brazil is political in nature and that the president is retaliating against the country for trying former Brazilian president and Trump ally Jair Bolsonaro for an attempted coup. Brazil is the largest coffee producer in the world and supplies a third of all coffee imported into America. The fear is that the 50% tariff will remain for non-economic reasons, and the fallout would impact the coffee trade globally.
There has been a significant push to exclude coffee from the tariffs. Both the National Coffee Association and the Congressional Coffee Caucus have lobbied for the exemption. Though the potential for tariff-free trade of natural goods is currently being used as leverage to broker a better deal, there is at least a glimmer of hope that the coffee industry can avoid massive disruption. But it all depends on Brazil.
Zac Cadwalader is the managing editor at Sprudge Media Network and a staff writer based in Dallas. Read more Zac Cadwalader on Sprudge.
