Prepare for higher coffee prices, warns this economist

The vast majority of coffee consumed in the US is imported, and already, economists are warning that the 10 percent tariff on most imported goods could lead to higher prices.

The 10 percent tariffs were the baseline established by President Donald Trump on April 2, in what the White House describes as a way to equal the trading playing field.

Why coffee drinkers should expect higher prices

Coffee is not the only product likely to experience price increases due to sweeping tariffs, some exceeding 100 percent, on certain goods imported from China. Furthermore, since approximately 99 percent of the coffee consumed in the country is sourced from abroad, there are no domestic suppliers available to provide customers with lower-priced options unaffected by these tariffs.

Priyanka Sachdeva, a senior market analyst at Phillip Nova Pte spoke with Bloomberg about coffee market conditions, as these latest tariffs come into effect. The conversation took place before the more punitive reciprocal tariffs, which would have hit some major coffee producers like Vietnam, were walked back by the White House. Sancheva expected the tariffs to contribute to an increase in market volatility, which was already high. As a result, these duties would likely “exacerbate existing supply tightness.” Before the tariffs, coffee prices had already seen a price increase. In 2023, reduced fertilizer use in Colombia and a drought in Brazil negatively impacted coffee production in those countries, putting upward pressure on prices that continued into 2024.

Meanwhile, Jorge Prudencio, who runs Bread Bite Bakery in Washington DC, told the BBC that his coffee suppliers told him that his next order would carry a price increase, resulting in a price increase for customers.

How dependent is the United States on coffee imports?

The United States is the world’s second-largest coffee importer, behind China. Very little coffee is grown in the United States, as the climate doesn’t allow it. Only Hawaii and Puerto Rico can produce the bean, so having this product on supermarket shelves depends on imports.

According to the National Coffee Association (NCA), more than 99% of U.S. coffee must be imported, primarily raw coffee beans. According to a report by the Department of Agriculture’s Foreign Agricultural Service, the top suppliers in 2023/24 were Brazil (32%), Colombia (20%), Vietnam (8%), and Honduras (7%).