Market Highlight 11.07.2025

   The 50% tariff imposed by the administration of President Donald Trump on imports from Brazil has sent shockwaves through the global coffee market and could sharply drive up the price of a cup of coffee in the United States. Brazil is the world’s largest coffee grower and exporter, while the U.S is both its biggest customer and the world’s largest consumer of coffee, with nearly 200 million Americans drinking it daily. Once the new tariff takes effect on August 1, it will effectively halt shipments of Brazilian coffee to the U.S, which imported 8,14 million 60-kilogram bags from the South American nation in 2024 - equivalent to about 33% of total U.S consumption. Brazil will need to redirect its coffee exports elsewhere, while the U.S will likely turn to alternative suppliers such as Colombia, Honduras, Peru, and Vietnam. Global coffee prices already rose by 70% last year amid supply shortages caused by heavier rainfall in several major producing regions.
   The USD gained about 0,11% against a basket of major currencies - including a 0,17% decline in the EUR - as markets appear to have adjusted to President Trump’s continually shifting tariff policies. Market sentiment is now more optimistic that worst-case tariff scenarios, which could severely damage the economy, are unlikely to materialize - helping to temper risk aversion compared to earlier phases of the trade conflict. This optimism is further supported by the Minutes of the Federal Reserve’s most recent meeting, which show that a majority of policymakers anticipate a rate cut by year-end, reaffirming the view that the U.S economy remains a pillar of the global trading system.
   The USD/VND interbank exchange rate fell by another 25 VND on Wednesday, marking its fourth decline in the past five sessions. Foreign capital flows continue to be active on Vietnam’s stock market, and the country’s successful conclusion of its tariff agreement with the U.S could provide further positive momentum for the exchange rate in the second half of the year. The exchange rate is forecast to edge higher at the start of today’s session before resuming its downward trend, with an expected target range of 26.050 - 26.150.

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