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Coffee Slides on Report US Lawmakers to Seek Tariff Exemption

(Bloomberg) -- Arabica-coffee futures slid to the lowest in almost a month in New York as the Washington Post reported that US lawmakers plan to introduce a bill to exempt coffee-product imports from tariffs.

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The bipartisan legislation would seek to exempt coffee products from any tariff imposed after Jan. 19, the day before President Donald Trump took office, the paper said, citing draft legislation. It could be introduced as soon as Friday.

The exemption would apply to roasted and decaffeinated coffee, as well as coffee husks, skins, and other products containing coffee, the newspaper reported. The legislation would still need Trump’s sign-off even if it were to succeed in the House and Senate, the paper said.

Arabica, the variety favored for specialty brews, dropped as much as 5.9% in New York, reversing an earlier gain. Robusta, the type most used in instant coffee, also slid in London.

Coffee prices have recently faced big swings, with arabica nearing an all-time high earlier this week, partly due to supply uncertainty. Trump’s tariffs on imports from Brazil — the world’s top coffee grower — has been a particular issue. Many American coffee buyers were shunning fresh deals from the South American nation after the levy took effect last month, Bloomberg has reported.

The move by the US lawmakers, while not an official exemption, points toward potential relief from current trade disruptions, Rabobank analyst Oran van Dort said. A return to normal flows could see Brazilian farmers selling stockpiles, which in turn would ease current market tightness and lead to lower prices, he said.

Weather has also driven supply concerns. Rainfall at the end of September and in early October will be critical for flowering in Brazil, Van Dort said. Adequate showers would support the 2026-27 arabica crop, set for harvesting in the middle of next year, he said.

Widespread rainfall is expected in some key coffee growing areas in Brazil next week, which will help soil moisture to recover from dryness, according to Somar Meteorologia.

Meanwhile, Vietnam is expected to harvest its biggest coffee crop in four years following good rainfall, according to traders, producers, exporters and analysts surveyed by Bloomberg News. The country is the world’s largest producer of robusta.

--With assistance from Megan Durisin.