President Donald Trump’s proposed 50% tariff on Brazilian imports could lead to higher coffee prices for U.S. consumers, as Brazil is a major supplier of green coffee beans to the country. The U.S. coffee market reached $19.75 billion last year and relies heavily on imports due to climate constraints for coffee farming in the U.S.

The potential increase in trade duties could exacerbate rising coffee prices caused by global supply issues, particularly in Brazil. Coffee futures hit all-time highs earlier this year, prompting concerns about inflation and costlier lattes for consumers. The tariffs are set to go into effect on August 1, unless Brazil strikes a deal with the White House.

Food and beverage makers, including coffee companies like J.M. Smucker, Keurig Dr Pepper, Starbucks, and Dutch Bros, may face higher costs for coffee if the tariffs are implemented. The industry is concerned about the impact on prices and inflation, as coffee is a key commodity that cannot be grown in the U.S. without suitable climate conditions.

Companies may explore importing beans from countries other than Brazil to mitigate the impact of tariffs, but prices are likely to rise regardless. At-home coffee brands like Dunkin’ and Maxwell House have already increased prices in response to commodity costs. Retailers may face pressure to absorb some of the price hikes to retain customers.

Starbucks, which imports coffee from 30 countries, could see a modest increase in costs if a significant portion of its beans come from Brazil. The company has diversified suppliers and menu offerings, which could help mitigate the impact of higher coffee prices. However, Nestle-distributed drinks could see a larger increase in cost.

Rival Dutch Bros, a drive-thru coffee chain, may see a minimal impact on its bottom line from higher coffee costs. Coffee accounts for less than a tenth of its cost of goods sold, so the tariff increase would represent a small percentage of its overall expenses. The industry is closely monitoring the situation and exploring strategies to manage the potential financial impact.

Read more at CNBC: Trump Brazil tariffs could raise coffee prices