Starbucks Could Take a Hit From 50% Brazilian Tariffs. The Cost of Coffee Beans Will Rise.

A Starbucks cup inside one of the company’s coffee shops in Sacramento, Calif. (David Paul Morris/Bloomberg)

The Trump administration threat of a 50% tariff on all Brazil imports will hit a variety of American companies. That includes coffee chain Starbucks, which imports a lot of coffee beans from Brazil.

Brazil is the largest coffee exporter to the U.S., accounting for 22% of the total in 2024. The new tariffs could dent Starbucks earnings by 1.4%, wrote TD Cowen analyst Andrew Charles in a Thursday note.

About 10% of Starbucks North America cost of goods sold stem from coffee beans, according to Charles, who estimates that 22% of which originate from Brazil. That means Starbucks North America business carries a 2.2% cost exposure to Brazilian coffee beans.

Assuming that 60% of the coffee cost is attributed to bean imports and 40% to roasting and distribution, the analyst forecasts that a 50% tariffs on Brazil goods would drive up Starbucks’ North America annual costs of goods sold by 0.5% and bring a 0.8% headwind to its adjusted earnings before interest, taxes, depreciation and amortization.

The new tariffs also implies a 3.5% lift to the cost of goods sold at Starbucks Channel Development, the business segment that sells roasted beans, ground coffee, single-serve K-Cups, and ready-to-drink beverages at retail channels like grocery stores and warehouse clubs. That translates to another 0.6% headwind to Starbucks’ earnings.

Likewise, the 50% tariffs on Brazilian coffee beans would impact Dutch Bros, another beverage chain that sources more than half of its coffee beans from Brazil. Coffee represents less than 10% of Dutch Bros’ cost basket, Charles estimates that the new tariffs could increase the company’s annual costs of goods sold by 1.3% and bring down its earnings by 0.5%.

Write to Evie Liu at evie.liu@barrons.com