Climate change, trade policy push coffee prices higher

Severe drought and Trump tariff converge in Brazil, the world's largest producer.

- BY RENATA CARLOS DAOU

Americans have been paying more for a cup of coffee after the U.S. imposed a 50% tariff on Brazil, the world's largest producer, in July.

Last week, prices surged again in the futures market as stocks of Brazilian beans in the U.S. dwindled to their lowest level since 2020 and President Trump threatened tariffs on Colombia, another big exporter.

But the president's trade war obscures another major factor driving up coffee prices: climate change.

Coffee-producing regions in Brazil have been undergoing an intense drought. Over the last month, parts of the state of Minas Gerais, a major coffee-producing region, have recorded about 70% of the average rainfall for this period. In a recent week, the area got less than half the historical rainfall average, according to the Bloomberg Brazil Weather Analysis.

"There's still the climate issue," said Fernando Maximiliano, coffee market intelligence manager at financial services network StoneX. "These tariffs, they're an additional layer, but we can't ignore the main, structural factor, which is the tighter supply."