The trade war triggered by U.S. President Donald Trump has spilled over to the breakfast tables of Americans.

On the 10th, President Trump announced he would significantly increase the tariff on all imports from Brazil from the current 10% to 50% starting next month.

However, given that Brazil is the world's largest producer of coffee, orange juice, and sugar, this move could be a devastating blow that shakes up grocery prices in the U.S.

Reuters reported on the 11th that Brazilian President Luiz Inácio Lula da Silva immediately responded, saying he would take equivalent action based on the principle of reciprocity. President Lula characterized Trump's letter as 'interference in domestic affairs' while keeping the possibility of retaliation open as he sought a diplomatic solution.

A worker dries arabica coffee beans at Conquista farm in Alfenas in the southern Brazilian city of Minas Gerais. /Courtesy of Yonhap News

Brazil is more deeply ingrained in the daily lives of Americans than one might think. According to the Brazilian Coffee Exporters Council (Cecafé), the U.S. imported 8.14 million bags of beans from Brazil last year, with one bag weighing 60 kg. This amounts to roughly one-third of the total coffee consumption in the U.S. Additionally, half of the orange juice consumed in the U.S. comes from Brazil.

Coffee and orange juice are more than mere luxury items for Americans; they are close to essentials. This means that many people start their day with a cup of coffee and a glass of juice. Traders predict that if the 50% tariff takes effect, the export of Brazilian coffee to the U.S. will effectively be blocked since neither U.S. roasting companies nor Brazilian exporters can bear such exorbitant tariff burdens.

According to Axios, a U.S. economic news outlet, citing a report from the AI-based investment analysis group Reflexivity, applying the new tariff could result in wholesale coffee prices rising by more than 40%. Based on that, the additional coffee costs an average American would have to pay each year would amount to $162 (approximately 220,000 won).

On the 10th of December 2015, a worker transports 1-tonne super sacks with coffee beans for export at a coffee warehouse in Santos. /Courtesy of Yonhap News

There are few import sources capable of replacing Brazil in the U.S. coffee market. Coffee is only grown in small quantities in certain regions within the U.S., such as Hawaii and California, making self-sufficiency unrealistic. Additionally, the production of oranges is expected to hit its lowest level in 88 years due to plant diseases like 'citrus greening,' hurricanes, and unusual cold weather. The reliance on imports instead of California oranges is steadily increasing.

Typically, coffee experts point to Vietnamese or Indonesian robusta beans as alternatives to Brazilian arabica beans. While arabica is known for its smooth taste and rich aroma, the robusta from these countries is characterized by a strong bitter flavor and high caffeine content, mainly used for instant coffee or inexpensive blends. Major robusta-producing countries like Vietnam and Indonesia will also be subject to the new U.S. tariffs beginning next month.

As news of the tariff hike broke, the international coffee bean market reacted immediately. On the Intercontinental Exchange (ICE), the price of arabica futures, categorized as high-quality beans, surged by more than 3.5% right after President Trump's announcement of the new tariffs on Brazil.

Giuseppe Lavazza, chairman of the global coffee brand Lavazza Group, predicted in an interview with the Financial Times that 'the real issue isn't the tariffs between the U.S. and Europe,' but rather the tariffs between the U.S. and coffee-producing countries like Brazil and Vietnam, which will ultimately lead to rising coffee prices in the U.S.