• Coffee prices surge as U.S. tariffs on Brazil and Colombia collide with ongoing droughts, squeezing global supply and driving costs higher.
• Brazil, producing nearly 40% of the world’s coffee, faces worsening droughts that threaten arabica yields and global market stability.
• Climate change intensifies pressure on coffee production, with studies warning half of current coffee regions may become unsuitable by 2050.

Coffee

Coffee prices have been on the rise since the summer.

In July 2025, the US imposed a 50% tariff on Brazil, the world largest producer of coffee.  The US President also threatened tariffs on Colombia, another big coffee exporter, thus spiking prices yet again.

Brazil produces almost 40% of the world’s coffee with arabica being mostly grown in the country. However, every year since 2020, the country has undergone droughts, resulting in global coffee demand outstripping supply.

Since August 2025, the future prices for arabica climbed almost 40% nearing record levels of USD 8,000 per ton. Meanwhile, prices of robusta, which is used for instant coffee, have increased by 37%.reaching USD 4,540 per ton.

Brazil

Coffee-producing regions in Brazil have been undergoing an intense drought. On a brighter note, Brazil’s The National Supply Company (Conab) said it expects recent rains to mitigate the stress on plants from the earlier drought. Despite this, prices are still expected to continue rising as temperature increases due to climate change.

Due to climate change, studies have indicated that only 50% of coffee- growing regions will be suitable for coffee production by 2050. Thus, the main structural factor behind the price increase is the tighter supply due to climate change.

As a result of this grim outlook, producing countries are preparing for the future. For instance, researchers in Brazil are zoning new coffee-growing areas with mild temperatures, rainfall or irrigation options.