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Commodities traders are racing against time to unload as much Brazilian coffee as possible in the United States before Trump's new 50 per cent tariff on Brazilian products is implemented on August 1, they said on Tuesday.
Newly released data showed US consumer prices rose in June as the cost of the Trump administration's tariffs began to be passed on, including to cups of coffee.
Some traders are diverting vessels mid-journey, canceling stops in other ports so that containers filled with Brazilian coffee can enter US ports without paying the 50 per cent tariff.
Others are sending some Brazil-origin coffee they have in stock in neighbouring countries such as Canada or Mexico, meant for use there, to the US market instead. Meanwhile, US-based importers are already posting wholesale listing prices that include the 50 per cent additional charge for any shipment arriving after August 1.
"We redirected some freight to land in the U.S. earlier, something that was headed to a longer journey," said Jeff Bernstein, managing director at coffee trader RGC Coffee. "But for some other cargos, we could not speed up."
No workarounds are available for coffee yet to leave Brazil.
Brazil produces a third of all the coffee used in the US, both as a single origin and as the base of most blends sold in the world's largest coffee-consuming country. The US produces only around 1 per cent of the coffee it uses.
Prices for coffee in the US. have already risen sharply after a 70 per cent spike in the market last year triggered by production shortages.
If implemented, the new 50 per cent tariff on imports from Brazil announced last week will cause a wave of price increases, market players say.
"It is a form of taxation which is hurting American businesses. No one else. Not Brazil. Not Brazilian President Lula. This new 50% tariff is an existential threat to importers like me," said Steve Walter Thomas, chief executive of US-based importer Lucatelli Coffee.
Brazilian coffee co-op Expocacer, which increased its sales to the US by 15 per cent last year, said no renegotiation is possible for deals with delivery after August 1.
"It is a tax imposed internally, in the importing country, so the importer is responsible to pay it and then pass it on to consumers," said Expocacer President Simao Pedro de Lima, adding that no export deals have been closed with US buyers after the Trump announcement.
Traders said if the tariff stands, coffee flows in the global market will be reordered, with Brazilian beans going to Europe and Asia, and the US buying more from Africa, South and Central America.
This change is not easy and will cost importers more, they said.
One trader, who asked not to be named, said Brazilian coffee makes up a third of the blends sold by coffee chains Dunkin Donuts and Tim Hortons. He said it is also widely used by Starbucks.
The three companies did not return requests for comment.
The US National Coffee Association declined to comment on the tariff, but said "coffee is a fixture in Americans' daily lives and the U.S. economy," noting that two-thirds of American adults drink coffee each day.
The association has asked the Trump administration to exempt coffee from the tariffs on Brazil.