The global arabica coffee market has experienced a sharp price rally in August, with contracts on the ICE exchange rising more than 30%-a surge directly tied to U.S. trade policy, according to Brazil's leading coffee exporters group.

On August 6, the U.S. implemented a 50% import tariff on Brazilian coffee as part of new trade measures by the Trump administration. The move has rendered exports to the U.S. "unviable," said Marcio Ferreira, president of Cecafe, Brazil's coffee exporters council.

"In meetings with American officials, I made it clear this tariff hike has created a wave of uncertainty, sending prices sharply higher globally," Ferreira stated. "There may be no ceiling to where prices could go from here."

By August 22, arabica futures had jumped from around $2.80 to $3.74 per pound, with no signs of cooling. Meanwhile, Brazil's 2025 arabica harvest, nearly complete, is coming in 10% below expectations, and recent frosts could further damage the 2026 crop outlook.

Importers are now shifting purchases to Central America and Colombia, but doing so at higher premiums, widening the price gap with ICE benchmarks. "This market disruption invites speculative funds to enter on the buying side," Ferreira said. "It's a perfect storm of tariffs, short supply, and financial speculation."

Despite U.S. headwinds, European and Asian demand for Brazilian coffee is booming. Ferreira noted that some of that growth is tied to Germany's role as a re-export hub-processing and reselling coffee into the U.S., where tariffs are lower for European goods than for Brazilian ones.

This shift in global trade flows highlights growing uncertainty in the coffee supply chain and the unintended consequences of trade protectionism. With Brazil as the world's top coffee producer, the ripple effects of U.S. tariffs are being felt far beyond American borders.