Marcio Cândido Ferreira, President of the Brazilian Coffee Exporters Council (Cecafe), says the United States (US) coffee industry is playing a waiting game in response to the implementation of tariffs on Brazilian exports.
President Donald Trump’s government has hit all imports from Brazil with a 50 per cent tariff as part of an executive order, which labelled the “recent policies, practices, and actions of the Government of Brazil” as “an extraordinary threat” to the US.
As a result, coffee buyers in the US have been requesting to postpone imports from the South American country in the hope that negotiations on the tariffs will reach a more favourable outcome.
“They have inventory of 30 to 60 days, which gives them some breathing room to wait a little longer for ongoing negotiations,” Ferreira told Reuters.
However, the continued postponement of shipments could have a negative impact on Brazilian exporters who use advances on exchange contracts (ACCs) for pre-shipment financing.
“With delays to business, an ACC is not complied with and we start to suffer from more interest, high fees, and additional costs,” says Ferreira. “Postponing shipments … has this cumulative and accentuated negative impact.”
At a similar time to the US tariffs being implemented on Brazilian products on 6 August, more than 180 new Brazilian coffee companies were approved to export their products to China, according to the Chinese Embassy in Brazil.
Their certification to export goods to China will be valid for five years, with Brazil now strengthening its global trade relationship with BRICS – an intergovernmental organisation comprising of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates.
