Apr 9 / Carolina França

American Tariffs: The Impact of “Liberation Day” on the Cocoa Market

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  • The commodities market is feeling the effects of “Liberation Day" and the tariffs imposed by US President Donald Trump.

  • For cocoa, the impact on global commodity prices came after the bean market hit a four-week high, adding another factor to an already volatile market.

  • Since the announcement, the cocoa market has seen a series of declines, with the May 25 London and New York contracts closing down 3.8% and 3.7% respectively last Tuesday.

  • If the tariffs remain in place, changes are expected in the trade flow and cocoa processing to save American buyers money.

  • As a result, a reduction in American cocoa grinding is expected, possibly triggering a rise in domestic prices in the coming months, also reflecting the raising fears of a global recession.


American Tariffs: The Impact of “Liberation Day” on the Cocoa Market

Last week was dominated by President Donald Trump's announcement of new tariffs on U.S. trading partners. The impact of the “Liberation Day" was felt in several commodity markets, with fears that a trade war could reduce demand and potentially lead to a global recession.

In the volatile cocoa market, the tariffs imposed on major producers and exporters of cocoa beans and by-products caused global prices for the commodity to fall due to concerns of a potential demand reduction. The U.S. is one of the world's largest consumers of cocoa and exporters of chocolate and confectionery. It imports cocoa beans and cocoa products from countries such as Ghana (beans), the European Union (cake and powder), Ivory Coast (beans and liquor) and Malaysia (butter), which are taxed at 10%, 20%, 21% and 24% respectively.

US: New Tariffs - Cocoa Market

Source: Hedgepoint, Refinitiv


If the tariffs remain in place, it is likely that in the coming months, there will be changes in the flow of trade and processing of cocoa to optimize operations for American buyers. For example, some possibilities include diverting beans to countries closer to the U.S. that have lower tariffs and grinding capacity, such as Canada, Mexico, Brazil and Ghana. In this way, U.S. demand for grains, butter, liquor and powder could be met by processing in other origins.

US: cocoa bean imports by origin (%)

Source: U.S. Department of Commerce 

US: cocoa butter imports by origin (%)

Source: U.S. Department of Commerce

US: cocoa powder imports by origin (%)

US: cocoa liquor imports by origin (%)

Source: U.S. Department of Commerce

Source: U.S. Department of Commerce


As a result, a reduction in U.S. grindings and higher domestic prices are expected in the coming months, not only for cocoa but also for other products, given the fear of a recession in the U.S. economy. This contributes to the prospect of a drop in the country's demand for cocoa, possibly adding to a global trend already discussed due to historically high prices of the bean since the beginning of 2024.

Finally, "Liberation Day" was another factor that added to an already extremely volatile market, given the past few years in the cocoa sector. Last week's decline came a day after the cocoa market hit a four-week high, reinforced by the prospect of a reduction in the Ivory Coast's mid-crop (April 2025 to September 2025) and a negative adjustment in production expectations for the 24/25 crop in Ghana, the world's two largest cocoa producers. However, this is not a new point, and the market continues to be bearish on the medium term, with expectations of a reduction in demand, cocoa arrivals at ports in line with expectations and an improvement in the cumulative rainfall in West Africa in recent weeks.

Cocoa May25 contract prices

Source: Hedgepoint, Refinitiv

Cumulative Rainfall Estimated for Ivory Coast’s Cocoa Districts (mm)

Source: Hedgepoint, Refinitiv

In Summary

Last week was marked by President Donald Trump's announcement of new tariffs on U.S. trading partners. For the volatile cocoa market, the tariffs imposed on major producers and exporters of both beans and by-products caused global prices for the commodity to fall. The U.S is one of the world's largest consumers of cocoa and exporters of chocolate and confectionery. It imports cocoa beans and cocoa products from countries such as Ghana (beans), the European Union (cake and powder), Ivory Coast (beans and liquor) and Malaysia (butter), which are taxed at 10%, 20%, 21% and 25%, respectively. If the current tariffs are maintained, changes in cocoa trade and processing flows are likely to occur in the coming months. As a result, a reduction in American grindings and higher prices in the country are expected in the short to medium term, not only for cocoa but also for other products, with fears of a recession in the American economy. This is contributing to a downward trend in cocoa prices over the medium term.


Weekly Report — Cocoa

Written by Carolina França
carolina.frança@hedgepointglobal.com
Reviewed by Lívea Coda
livea.coda@hedgepointglobal.com
www.hedgepointglobal.com

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