Prices of coffee, cocoa slide as Trump's tariffs spark demand worries

World cocoa and coffee prices fell on Wednesday as investors fretted that President Donald Trump's move to slap punishing tariffs on US imports would damage chocolate and coffee demand in the world's top consumer of the products. 

Sugar prices also fell, caught in the melee of tariffs as the US is also one of the world's top sugar importers. Trump said he would impose a 10 per cent baseline tariff on all US 

imports, taking the maximum to more than 50 per cent for some countries and unleashing turbulence across world markets as investors fret about the end of a decades long era of trade liberalisation. 

 

Top robusta growers Vietnam and Indonesia were targeted with 46 per cent and 32 per cent tariffs, respectively, top arabica and sugar grower Brazil was hit with 10 per cent tariffs for its goods, while top cocoa growers Ivory Coast and Ghana face 21 per cent and 10 per cent tariffs. 

The US is also a major importer of processed cocoa products like butter and powder from the EU, Malaysia and Indonesia. Trump slapped 20 per cent tariffs on EU imports and 24 per cent on Malaysian goods, while the 32 per cent tariffs on Indonesia of course apply to both robusta coffee and to cocoa products. 

"We don't know the (full) impact right now (but) there are no winners, this is bad for everyone. For the US its inflationary while others loose access to the US, a huge market," said a Europe-based coffee trader. 

At 1554 GMT, arabica coffee futures on the ICE exchange, seen as a global price benchmark, were down 0.7 per cent at $3.8605 per lb, having earlier fallen nearly 3 per cent, while robusta coffee futures slipped 0.1 per cent to $5,393 a metric ton, having earlier fallen 2.5 per cent. 

London cocoa futures were down 1.9 per cent at 6,654 pounds per ton, having earlier fallen nearly 5 per cent, while New York cocoa was up 3.3 per cent at $9,262 a ton, having earlier risen nearly 6 per cent. 

Dealers said New York cocoa was being boosted by weakness in the dollar as the harsher-than-expected Trump tariffs sent investors scrambling for bonds and gold. 

A weak dollar makes dollar-priced cocoa cheaper for non-US investors. Sterling for example gained versus the dollar, making sterling priced London cocoa more expensive for investors outside Britain and prompting them to sell.