World coffee prices plummeted on Friday after U.S. President Donald Trump canceled a 40% tariff on agricultural imports from Brazil. This decision was a response to growing dissatisfaction among Americans over high food prices, Reuters reports.
Market Reaction
Coffee quotes began to fall immediately after the announcement from Washington. The tariffs, which had been in place since the beginning of the year, were one of the reasons for the rising coffee prices in the U.S. – in September, retail prices surged by 40%, which, according to a Reuters/Ipsos poll, negatively impacted the president's approval rating.
Brazil, which accounts for a third of U.S. coffee bean imports, felt the immediate effect of the decision. As of 10:17 GMT, arabica quotes on ICE dropped by 4.6% to $3.5925 per pound – a two-month low. Robusta fell by 5% to $4,400 per ton.
Cautious Optimism
European traders remain cautious. "The market needs to absorb this. More declines? Maybe, but I don’t believe we will fall below $3 per pound. I would rather be a buyer, even if this news leads to any drop," noted one of the leading traders in the global coffee market.
According to him, despite the short-term price drop, the market remains tight due to a shortage of arabica and low certified stocks.
Earlier, Switzerland persuaded Trump to lower U.S. tariffs using gold and Rolex watches, Axios reported. Trump himself promised $2,000 to every U.S. citizen thanks to the new tariffs.
