How Trump's tariff exemptions are stirring up the global coffee market

As soon as the policy is announced, futures fall

On Thursday, Trump signed an executive order removing Brazilian food products from the tariff list, including the highly watched 40% coffee tariff. The market reacted immediately on Friday—Arabica coffee futures (March contracts) fell 1.91% to a 7-week low, and Robusta coffee fell 2.70%.

This is how the chain reaction occurs

The key catalyst is the Brazilian real falling to a 5-week low. A weaker currency = Brazilian coffee producers are more aggressive in selling. Additionally, the market expects heavy rains in Brazil, which is favorable for crop growth but unfavorable for prices.

The Real Story of the Supply Side

What is behind this round of tariff exemptions? About 1/3 of the coffee imported by the United States comes from Brazil. During the period when the tariffs were in effect from August to October, the procurement volume of coffee from Brazil by the United States plummeted by 52% year-on-year (down to 984,000 bags). Now that the exemptions are in place, American buyers will likely rush back in. In the short term, this seems bearish for futures, but in the long term, it may release the suppressed demand.

Support and Resistance of Data Metrics

Bearish factors: Vietnam's coffee production is expected to rebound to 1.76 million tons in the 2025/26 fiscal year (up 6% year-on-year), reaching a four-year high; although global coffee inventories are tight (Arabica has fallen to a 1.75-year low of 398,645 bags), the trend of increasing supply is evident.

Positive aspects: Delayed harvesting due to rainfall in major production areas in Vietnam may pose a risk of reduced output; Brazil's production estimate for the 2026/27 season is 70.7 million bags (up 29% year-on-year), but that is a later discussion; the International Coffee Organization reports a slight year-on-year decline of 0.3% in global exports for this fiscal year (October-September).

What to look at next

The key is the weather in Brazil - the forecast for the next week shows heavy rain. Whether this will truly benefit crop growth or become a reason to suppress prices is still under observation by the market. At the same time, pay attention to U.S. procurement data and whether exemptions can quickly translate into real orders.