US President Donald Trump’s imposition of sweeping tariffs has sparked a significant shift in global trade dynamics, pushing food and drink exporters towards China. This move, intended to bolster American jobs and the economy, is having unintended consequences, according to industry experts.
Agricultural brokers report a surge in interest from exporters worldwide looking to trade with China. Brazil, the largest coffee producer globally, faces a 50% US import tax, one of the highest tariffs imposed by Washington. This has made the US market less attractive for Brazilian exporters, who are now turning to China’s burgeoning cafe culture and vast market.
Brazil’s Coffee Exporters Eye China
Hugo Portes, a supply chain specialist, described China as “a shining light” for Brazil’s coffee exporters. “If the tariffs are meant to weaken Brazil, in reality, it is pushing sellers closer to China,” Portes told the BBC. Brazilian exporters are seeking buyers for approximately eight million bags of beans sold annually to US roasters, as tariffs begin to bite.
In July, anticipating the tariffs, over 180 Brazilian coffee firms registered to export to China, an “unprecedented” move according to Portes. Last year, Brazil’s coffee producers signed a billion-dollar deal with Luckin Coffee, China’s equivalent to Starbucks.
Fernanda Pizol, a Brazilian coffee bean exporter, noted that her farm, Daterra Coffee, would increase sales to China and other markets if US demand declines. “We’ll need to diversify… We already have a waiting list of buyers,” she said, citing thriving sales in Japan and Europe.
Impacts on Indian Exporters
India, facing a 50% US tariff since August, is also redirecting exports like tea and seafood towards China. The tariffs are part of Washington’s strategy to pressure Russia over the Ukraine War, imposing a 25% levy for India’s oil purchases from Moscow, alongside a 25% tariff on Indian goods.
K N Raghavan, secretary-general of the Seafood Exporters Association of India, expressed concern over stalled US orders for prawns amid ongoing trade discussions. “It will be a difficult time,” he said, though he remains optimistic about India’s negotiations. China, India’s second-largest seafood export market, is a primary alternative, with Europe also holding potential due to a pending free trade agreement.
Mohit Agarwal from Asian Tea and Exports highlighted China’s role as a top alternative market but worried about losing ground to African competitors offering similar quality products at lower prices.
American Consumers and Businesses Feel the Pinch
Some American businesses are struggling to adapt to the tariffs, arguing domestic production of goods like coffee and prawns is impractical. A major US seafood trade association has called for a tariff exemption, citing the dominance of imports in the US seafood market and overfished American waters.
Retail giant Walmart warned of likely price increases due to tariffs, having absorbed higher costs so far but expecting them to continue rising. Analysts predict that at least part of Trump’s tariffs will be passed on to American consumers.
“US buyers have already put their money down, even with the 50% tariff in mind,” said Abuthahir Aboobakar, sales director of Jeelani Marine Products, noting his US customers’ continued orders despite the tariffs.
With customers in 60 other countries, Aboobakar’s firm is prepared to shift exports away from the US. “We have already diversified,” he said. “Countries like China and Europe will have a greater share in our exports going forward. So that will be the strategy.”
Looking Ahead
The implications of Trump’s tariffs are far-reaching, potentially reshaping global trade patterns and relationships. As exporters pivot towards China and other markets, the US risks losing its status as a preferred trading partner for many industries. The ongoing trade tensions highlight the complexities of global commerce and the interconnectedness of economies worldwide.
As the situation evolves, businesses and consumers alike will need to navigate the challenges and opportunities presented by these shifting trade dynamics.
