High inflation rates in the U.S. put pressure on the White House last week. On Friday, November 21, President Trump signed an order to remove 40% tariffs on various Brazilian food products. Beef, coffee, cocoa, and fruits are among the goods that will no longer face tariffs.
The removal is effective on or after November 13. That means that the U.S. might need to refund duties that it collected on those goods.
Brazil is a major supplier of coffee to the U.S., At around one-third of the coffee market. Consumers faced inflation from the 40% tariffs. Coffee prices rose by around the same percentage (of 40%).
Coffee Stocks
Shares of Starbucks (SBUX) are trading in the $80 - $85 range. The company is unlikely to sustain a breakout, since consumers are cutting back. Dutch Bros (BROS), like Starbucks, trades at a premium.
Watch Keurig Dr. Pepper (KDP). The company is acquiring JDE Peets to build its market in the coffee and tea space. The stock trades at a discount (below 13 times forward price-to-earnings). Markets are skeptical that KDP will successfully integrate JDE Peets in its operations. Any misstep will lead to operating losses and a goodwill write-down.
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