SBUX is down 1.15% YTD, and is down 8% over the last five trading sessions. It is not difficult to figure out why. President Trump is sitting on the stock. Or rather, his 50% tariff on Brazil—the world’s largest producer of coffee—isn’t investors’ preferred cup of tea.
In its Q2 earnings call, the company reported a 2% decline in same-store sales, even as per-customer sales rose 1%. That suggests coffee price increases are already percolating through the company.
The U.S., of course, grows close to zero coffee. Thus the tariff on Brazil will result solely in price increases for American coffee drinkers.
The rest of the world is likely to benefit. There are plenty of markets for coffee. If U.S. demand goes down, the extra supply for foreign customers is likely to depress price growth.
That’s already happening. Global arabica coffee futures have declined by 30% this year and currently sit at around $2.96 per tonne. In sum, coffee in America is getting more expensive, but for everyone else it’s getting cheaper.
That dynamic—that the tariffs are going to hurt global economies less than first thought and may contain advantages for some foreign markets—goes some way to explaining why markets are largely up across Asia and Europe this morning.
Here’s a snapshot of the action prior to the opening bell in New York:
