Posted originally on Sep 21, 2025 by Martin Armstrong |  

Posted originally on Sep 20, 2025 by Martin Armstrong |  

Posted originally on Sep 19, 2025 by Martin Armstrong |  

Coffee prices are the latest grocery item troubling American consumers. The United States is the world’s largest importer of coffee, but produces less than 0.1% of all coffee for domestic consumption, importing over $8.2 billion (1.6 metric tons) of coffee last year alone. The average retail price of coffee spiked 21% in the past year, marking the sharpest rise since the late 1990s.

Tariffs are certainly part of the problem. Brazil produces around 37% of the world’s coffee, but now faces a 50% tariff on coffee beans. The average price of Brazilian coffee now sits around $6 per pound. Brazil also experienced a depleted harvest in 2024-25 due to drought and unfavorable weather conditions. The harvest was 9% beneath traditional levels. Global production rose by 4.3 million bags, but was offset by lower stocks, and prices remained high. The US spent $1.41 billion last year on Brazilian coffee alone, and a 50% tariff in addition to increased prices is causing grocers and retailers to raise prices.

Brazil and Colombia primarily focus on Arabica beans, with Colombia being America’s second-highest importer. In far contrast to Brazil, Colombia’s tariff sits at 10%. Still, the US purchased $1.4 billion in coffee beans from Colombia last year and any levy will be felt by consumers. Colombia’s 2024-25 coffee harvest was extremely robust at 13.2 million bags, a 23% increase from the previous year. Farmers believe production will fall by 5.3% in the coming harvest due to weakening La Nina conditions and heavy rain.

Vietnam supplies 17% of the world’s coffee, but the US mainly relies on South America for imports. Vietnam’s tariff sits at 20% and many roasters have complained that this is affecting their bottom line. Same with Indonesia, which has a 19-32% levy.

Brazilian coffee exports to the US have fallen by nearly 46% since tariffs were imposed. While the US consumed 15% of Brazilian coffee exports, Germany was close behind at 14% and has surpassed the US to become the top buyer. It is undeniable that tariffs on Brazil have caused a spike in US coffee prices, which has been exacerbated by a weak harvest.

Posted originally on Sep 17, 2025 by Martin Armstrong |  

Members of the Federal Open Market Committee (FOMC) voted to reduce the benchmark federal funds rate by 25 basis points, setting the new target range at 4 percent to 4.25 percent. The Fed statement was clear, with one dissenter, Stephen Miran, who recently joined.

“Recent indicators suggest that the growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated,” the FOMC said in a statement.

The market was widely expecting a 25 basis point cut in rates, as our computer has been forecasting for months that any cut would be in September, not before. However, there were the typical groups of questionable analysts touting that a 50 basis point cut could lead to a more significant market rally.

With the prospect of war on the horizon and a sovereign debt crisis brewing in the EU, there are realistic expectations for a continued decline. The risk is that Trump will interfere in the Fed, leading to a loss of confidence worldwide, which would result in unrealistic interest policy into early 2026. There remains the risk of another cut during the next quarter.