Insight Focus
Once again, policy announcements from the US are the biggest news for global food supply. A threatened 50% tariff on Brazilian imports and up to 40% on other origins is particularly bad news for coffee and orange juice. Meanwhile, extreme weather continues to impact food production globally.
New Trump Announcements Confuse Market
A series of seeming policy announcements from President Trump have caused confusion among global food commodities.
Last week, several media outlets reported that the President sent a letter to his Brazilian counterpart, Luiz Ignacio da Silva (Lula) threatening 50% tariffs against the South American agricultural giant starting August 1. This was in response to Trump’s dissatisfaction over the trial of former Brazilian president Jair Bolsonaro, who is awaiting trial on charges of plotting a coup in 2023. Bolsonaro denies the allegations and President Trump has brandished the claims a “witch hunt”.
Brazil’s primary export to the US in value terms is crude oil, according to data from Comex. However, the data show that in 2024, Brazil exported USD 1.9 billion worth of coffee, USD 1.19 billion worth of fruit juices and USD 885 million of frozen meat to the US.
Source: Comex
Brazil has run a trade deficit with the US since 2007, buying about USD 3.2 billion more than it sells in 2025, according to data from the US Census Bureau.
Source: US Census Bureau
So far, five countries (Japan, the Philippines, Indonesia, Vietnam and the UK) have announced deals with the US. A further 22 countries have received letters from the president since July 7 threatening rates as high as 40%.
Coffee, OJ Uncertainty Looms
If the 50% tariffs against Brazil go into force, few agricultural sectors will be hit harder than coffee and orange juice. Already, traders are rushing to land Brazilian coffee in the US before the tariffs potentially take effect. Coffee prices rose sharply last year due to production issues but have begun to dip slightly in 2025.
However, with Brazil producing one-third of coffee consumed in the US, the price is set to rise sharply again for US consumers.
Source: US Bureau of Labor Statistics
Likewise, the US is highly exposed to Brazilian imports when it comes to orange juice. Two of the world’s biggest orange producers are the US and Brazil, but the former has faced several adverse weather events in key producing state Florida in recent years, causing yields to decline.
This has caused frozen concentrated orange juice (FCOJ) prices to rise globally. For US consumers, additional tariffs are likely to push prices up further.
Source: US Bureau of Labor Statistics
One US orange juice importer – Johanna Foods – has hit the Trump administration with a lawsuit over the tariffs, claiming it would cause a USD 70 million adverse impact to its business and increase consumer prices.
According to the Wall Street Journal, economists now expect 12-month CPI to sit at 2.7%, up from previous estimates of 2.4%.
For one industry, however, one of President Trump’s latest announcements has provided support. In a message posted to his Truth Social account, the president said he would pressure Coca-Cola to return to using real cane sugar instead of high fructose corn syrup (HFCS).
Subsequently, in its second quarter earnings release, the company confirmed plans to launch a version of the popular drink made with cane sugar, but framed it as an “addition” to its portfolio.
US Pushes Forward Trade Talks with Mexico and Canada
The US is also facing rising trade tensions closer to home, with Mexico and Canada—its two largest agricultural partners—where unresolved disputes threaten to disrupt vital supply chains and markets.
Despite a scramble from Mexican negotiators to preserve the long-standing Tomato Suspension Agreement, the Trump administration withdrew from the agreement on July 14, arguing it has failed to protect US growers from unfairly priced imports. The agreement allowed Mexican tomatoes to enter the US duty-free under strict price and quality controls.
Mexican tomatoes now face tariffs between 17% and 21%, jeopardizing a supply chain that supports over 30,000 jobs in Texas and generates more than USD 2 billion annually in trade.
Broader US–Mexico talks have stalled over energy policy, labour standards and agricultural regulations. While disputes over Mexico’s ban on genetically modified corn and labour enforcement remain key obstacles, the US administration seems to have lost patience and Mexico was one of the recipients of a letter from the president on July 12, issuing the country with a 30% tariff. It is understood that this applies to products that are not subject to the USMCA trade deal.
Canada received a harsher level of 35%, and the possibility of a trade deal between the North American countries is looking even more unlikely. At the G7 summit in mid-June, Canadian premier Mark Carney said that he would only sign an agreement “that’s in Canada’s best interest“. He has not ruled out the possibility of counter-tariffs.
Trump has specifically focused on Canada’s tightly controlled dairy, eggs, and poultry industry, which has restricted production and limiting imports through high tariffs since the 1970s. The US president called Canadian dairy duties “tremendously high.” The USMCA offered limited duty-free quotas for US dairy, but anything above these levels can face tariffs exceeding 200%. Washington has repeatedly challenged Ottawa’s quota system without success, and dairy remains a key sticking point as talks resume.
Panama Ports Deal Faces New Pressure
Several news outlets have reported that China has threatened to upend the belaboured sale of more than 40 ports by Hong Kong-based CK Hutchison to BlackRock and MSC. The Wall Street Journal published an exclusive report suggesting that Chinese officials have threatened to block the deal unless it includes the state-owned shipping firm COSCO.
While BlackRock, MSC and Hutchison are all reportedly open to COSCO’s involvement, this is unlikely to sit well with President Trump, who aims to reduce Chinese influence in the Panama Canal.
The Canal is a key connection point for global trade, particularly for US East Coast-Asia importers and exporters. However, it also plays a key role for trade between the US East Coast and Central and South American West Coast.
Source: Panama Canal Authority
One issue that the Canal may not have to content with this year is low water levels. The issue tends to come up during Panama’s dry season between December and April, but high rainfall at the end of 2024 and into 2025 has been working in the Canal’s favour.
Throughout 2025, rainfall at the Gatun Lake – the main feeder for the Canal – has been consistently above the five-year average.
Source: Panama Canal Authority
Calls Grow to Delay EUDR
Mondelez International has recently called for a further delay to the EU Deforestation Regulation (EUDR), set to take effect in December 2025. The regulation requires companies marketing cocoa (and several other commodities in the EU) to prove their supply chains are free from deforestation impacts.
However, less than 20% of cocoa farmers in Ivory Coast—a key supplier—have obtained the mandatory traceability ID cards. Mondelez warns that without more time to build these systems, compliant cocoa risks being excluded from the EU market, harming farmers, disrupting supply chains and increasing costs in a EUR 70 billion industry already facing record-high prices.
Massimiliano di Domenico, Mondelez’s VP for Europe, stressed the need for the EUDR to be “workable in practice,” calling for legal clarity and simplification. Delaying the law would help stabilise the market amid supply shocks and ensure adequate farmer support.
Cocoa prices hit record highs in January 2025, driven by supply challenges in West Africa and strong demand. Although prices have since stabilised, they remain elevated, maintaining pressure on the industry.
Amid these challenges, Brazil is positioning itself as a growing force in global cocoa production. Expected to harvest 300,000 tonnes this year—a 4% increase from 2024—Brazil aims to reach 400,000 tonnes by 2030. Unlike traditional smallholder farms, large agribusinesses in regions like Bahia are investing heavily in seedlings, irrigation and modern management practices, achieving yields up to six times the national average.
Source: IBGE
EU-Ukraine Secure Preliminary Agreement on Agricultural Exports
The European Commission and Kyiv have reached a preliminary agreement to regulate Ukrainian agricultural exports to the EU following the expiration of the Autonomous Trade Measures (ATMs) on June 5, 2025. Since June 2022, the ATMs had suspended import duties and quotas to support Ukraine’s economy during the war, helping boost Ukrainian exports to the EU to nearly 60% of total exports in 2024, up from 39.1% in 2021.
Source: Eurostat
The new deal aims to balance the full trade liberalisation under the ATMs with the regular tariff system of the EU-Ukraine Association Agreement, which Kyiv warned could cost its economy EUR 3 billion annually if fully reinstated without modifications.
Farmers in frontline EU states—such as Poland, Hungary, and Romania—had protested against the ATMs, arguing that cheaper Ukrainian imports disrupted local markets. In response, the EU introduced safeguard measures that limited imports of certain goods, and these safeguards will continue under the new agreement, allowing member states to raise trade concerns individually.
The final agreement requires approval from EU member states and is expected soon, marking cautious progress for Kyiv amid ongoing political pressures in the EU.
Extreme Weather Continues to Impact
According to a recent report by the Barcelona Supercomputing Centre (BSC), extreme weather continues to play a key role in food price rises. The report stated that extreme heat, drought or heavy precipitation events impacted a range of crops from Australian lettuces to UK potatoes.
In one recent example, Eastern China is experiencing an unusually early and intense heatwave, with temperatures nearing 40°C in key agricultural provinces. Arriving before the traditional Sanfu summer, the heat threatens crops during vital growth stages and adds pressure to rural incomes.
Farmers in the Yangtze River basin report heat stress in rice, corn, and soybeans. With low rainfall and high evapotranspiration, soil moisture is dropping fast, especially in Jiangsu, Anhui, and Hubei. In Sichuan, drought worries grow due to below-average rainfall.
And low water levels in the Rhine – a key artery for European grains, minerals and energy products – are plaguing Germany for yet another summer. The channel remains too shallow for vessels to travel fully loaded, which pushes up shipping costs and forces operators to impose surcharges.
