CNBC's Kate Rogers, joins 'The Exchange' to report on Brazil’s critical role in U.S. coffee imports and the potential impact on Starbucks and Dutch Bros.

Washington

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

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Brazil is a major supplier of coffee to the United States, accounting for about 22% of US coffee imports last year. Major coffee retailers such as Starbucks and Dutch Bros source a significant portion of their beans from Brazil, with Starbucks at 22% and Dutch Bros at 56%. Despite concerns over potential tariffs, analysts indicate that immediate price increases for consumers are unlikely. Starbucks has stated it will not raise prices through 2025 and is focused on its current business strategy, while both companies have the option to source coffee from other countries if necessary. Analysts also note that coffee is a discretionary purchase, and retailers are cautious about raising prices in the current economic environment.

How Brazil's tariff threat could impact the coffee industry

Let's get to Kate with the impact on coffee and the fallout for restaurants and coffee prices had finally coming been coming down, right Kate Yeah, that's right Kelly so Brazil is a key import partner for US coffee retailers accounting for about 22% of US coffee imports last year about 20% over the last five years the next largest is Columbia at 17% last year 19% in the last five that's according to research from TD Cowan now the two names that have exposure here Starbucks and Dutch Bros Which TD says source 22% and 56% of their beans from Brazil Starbucks says it remains focused on its back to Starbucks plan continues to monitor for any potential business impacts though Reminder here for viewers. It does source from more than 450,000 farmers in 30 countries so wide reach there Overall, does this mean your coffee will be more expensive if these tariffs do stick not so fast I did speak with Andrew Charles today of TD Cowan He says the obvious here the tariffs may or may not stick around companies across the restaurant space are not keen to take price right Now especially Starbucks, which is not increasing costs through 2025 for consumers Also, there of course are mitigation tactics in place for any coffee importer to source from elsewhere along the coffee belt in South America Including Columbia again coffee is very discretionary Kelly right now Even though it is a ritual for so many people including myself in the mornings the idea That the retailers on the restaurant side would raise prices in this environment right now isn't likely according to analysts But it's something to keep an eye out for so if they go up on the margin Then would the companies you think just take the hit to profit margins? I think this year. Yes Obviously, we're just a few weeks away from kind of peak restaurant earning season But Starbucks in particular really really heads down on this back to Starbucks plan bringing consumers back into the cafes Kind of tightening up the menu and a price hike right now just simply doesn't go along with that Dutch Bros could potentially have a little bit more wiggle room. It's had strong same-store sales Different kind of consumer spending environment for that brand in particular, but again across the entire space, you know Coffee is an easy thing to cut out of your ritual and make at home So I don't really see it happening and analysts agree indeed We'll watch on that front Kate for for the ripple effect meantime big day for McDonald's snack wrap That's right. It's back I'd 11 years I think it's but you know, this was like the top story and a lot of different way. The snack wrap is back It is back and it's something franchisees had been asking for you know for several years So we'll see how it performs but I think a lot of excitement there see if it brings in that lower income consumer because remember that's something that McDonald's and a lot of the fast-food players in particular have been struggling with. All right, Kate Rogers for now. Thanks. Appreciate it Coming up the browser battle lines are being drawn one major AI player reportedly readying its own search engine to challenge Google We have details and more in tech check

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How Brazil's tariff threat could impact the coffee industry

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