SAO PAULO, July 7 - Brazil's instant coffee sector has cautioned that a newly proposed 25% tariff on its product could lead to higher costs for American consumers and businesses by unsettling a market in which the United States is heavily dependent on imports.
The Brazilian Soluble Coffee Industry Association (Abics) says more than 90% of Brazil's instant coffee shipments go to the U.S., making up over one-fifth of U.S. instant coffee imports - roughly 15,500 metric tons a year. Industry officials argue that adding tariffs would raise expenses for companies and jeopardize jobs, with the added costs ultimately being passed on to U.S. consumers.
"By imposing additional tariffs, the first impact falls on companies and jobs, and those higher costs will ultimately be passed on to American consumers," said Aguinaldo José de Lima, executive director of Abics.
The Office of the U.S. Trade Representative has proposed a 25% tariff on Brazilian products under a Section 301 investigation. Separately, the previous U.S. administration announced an additional 12.5% tariff that applies to goods from more than 60 countries, a list that includes Brazilian instant coffee.
Representatives from Abics, the Brazilian coffee exporters' group Cecafe and the U.S.-based National Coffee Association appeared at USTR public hearings in Washington on consecutive days to press their concerns. They told the hearings the proposed levies would push consumer prices higher, compress business margins and hit lower-income households hardest because those households rely more on affordable instant coffee.
Industry officials also highlighted the limited domestic production capacity in the United States. According to Abics, the U.S. produces less than 6% of the instant coffee it consumes. "The (U.S.) depends on imports, and there are currently no suppliers capable of replacing Brazil’s volumes at comparable prices," Lima said.
At present, Brazilian instant coffee faces a temporary 10% global import duty that the White House imposed after U.S. courts struck down an earlier 50% tariff on most Brazilian goods. The current duties sit alongside the newly proposed measures under consideration by the USTR.
Instant coffee has been gaining traction among U.S. drinkers. The National Coffee Association reports that 11% of daily coffee consumers now drink instant coffee, up from 6% in 2021.
Abics has also questioned the rationale for treating instant coffee differently from other coffee products in tariff exemptions. Lima noted that while other coffee products were exempted from certain tariffs, instant coffee was excluded. He pointed out that even flavored instant coffee is exempt, saying there is no technical basis for singling out instant coffee for different treatment.
The industry representatives at the USTR hearings urged policymakers to consider the potential for higher prices and strained supplies if the 25% tariff is enacted, and they emphasized the particular vulnerability of lower-income consumers to such cost increases.