The Trump administration’s announcement to eliminate certain reciprocal tariffs on agricultural products has been overshadowed by reports that the 40 percent additional tariff on Brazilian coffee will remain in place. This development is expected to fuel a continued rise in coffee bean prices, adding pressure to an industry already affected by an economic downturn and increasing raw material costs.
Data from the Korea Agro-Fisheries and Food Trade Corporation (aT) and the Food Industry Statistics (FIS), released on November 19, reveal a persistent upward trend in Arabica coffee bean prices over the past four months. The price has surged from 6,563 KRW (approximately 4.48 USD) in July to 8,979 KRW (approximately 6.13 USD) in November, marking a 36.8 percent increase. Compared to the average price a year ago, 7,931 KRW (approximately 5.41 USD), the recent price of 8,814 KRW (approximately 6.02 USD) represents an 11 percent rise.
This price surge is attributed to rising futures prices in the global market. Earlier this year, President Donald Trump imposed an additional 40 percent tariff on Brazilian coffee and other agricultural products on top of the existing 10 percent reciprocal tariff. Since Brazil accounts for more than 60 percent of the world’s Arabica bean production, this measure has had significant implications for the international coffee market.
The anticipation of further price increases has triggered stockpiling and speculative buying. On October 17, Arabica coffee futures on the New York ICE exchange hit an eight-month high, surpassing $4.20 per pound, while certified stocks plummeted to a 19-month low.
In response to inflationary pressure, President Trump signed an executive order on November 14 to exempt certain reciprocal tariffs. However, Brazilian Vice President Geraldo Alckmin confirmed that the 40 percent additional tariffs on coffee, beef, and tropical fruits will remain in effect.
Consequently, international coffee prices, which had dipped for three consecutive trading days last week on hopes of tariff reductions, are now showing signs of rebounding. The situation is further compounded by Brazil’s national crop agency, Conab, lowering its production estimate for Arabica beans by 4.9%. If U.S.-Brazil trade negotiations continue to stall, coffee prices are likely to remain on an upward trajectory.
This scenario is particularly concerning for the coffee industry, which is already suffering from declining sales due to the economic slowdown. The combination of high exchange rates and rising international coffee prices is placing a significant financial strain on companies.
Despite these pressures, businesses face difficulties raising prices toward the end of the year, especially given the government’s focus on stabilizing food prices. With the Fair Trade Commission already investigating prices of staple food items such as flour and sugar, companies have little choice but to absorb the rising costs.
An industry insider commented that while companies are absorbing internal and external cost-increase factors, the burden continues to grow due to rising exchange rates and soaring import prices for raw materials. If this trend continues, intensified price competition among brands and negative effects on profitability are expected.
A representative from a major coffee franchise added that they are closely monitoring market trends in supply and pricing. Their strategy is to mitigate rising costs through diversified procurement and to prepare contingency plans for potential market developments.