The trade war is coming for your morning cup of coffee

A good cup of coffee is an affordable luxury. Unfortunately, it’s becoming less affordable by the day.

In a major shift to U.S. trade policy, the Trump administration’s “Liberation Day” tariff package has introduced import duties on raw coffee beans, a move that’s sparking alarm in an industry already strained by record-high prices.

In February, the global price of arabica coffee reached $4.41 per pound, the highest price in recorded history, surpassing the spikes of 2011 and the frost crisis of 1977. That milestone occurred before any tariffs were announced, and though the price has since receded, it remains at elevated levels. As of June, a pound of roasted coffee costs U.S. customers nearly 13 percent more than it did a year earlier.

Now, with new duties added, a wave of panic is rippling through the global coffee trade. The United States is the world’s largest importer of raw coffee.

Coffee, much like bananas, is a tropical fruit. But coffee is even pickier: It doesn’t just need the heat and humidity of the tropics; it can typically grow only at tropical altitudes. These conditions are found almost exclusively in a narrow band around the equator, often referred to as the “coffee belt.” Within the United States, only a tiny fraction of land in Hawaii and Puerto Rico meets these requirements, making domestic coffee farming extremely limited.

Though some farmers are finding success growing coffee in the microclimate of Southern California, American labor costs and limited production keep California-grown coffee at a price point that most Americans simply cannot afford.

Despite that, the United States is the largest coffee-consuming nation in the world. And an enormous amount of work happens after the coffee leaves the farm: importing across oceans, processing and grading, transporting to roasters, roasting to bring out flavor, packaging, and finally preparing, brewing, selling and serving it to millions of people every day. Coffee farming might start in the tropics, but the coffee industry inside U.S. borders is massive, accounting for millions of jobs.

For decades, coffee entered the country duty-free, a recognition of its foundational role in a U.S. industry that supports more than 1.7 million American jobs. That exemption is now gone. In April, the Trump administration implemented a 10 percent baseline tariff on nearly all imported coffee. This month, it raised tariffs on dozens of trading partners, with coffee-producing nations India, Indonesia and Vietnam facing sharply higher rates. Coffee from countries with strong trade agreements with the U.S., including Mexico and Colombia, remains exempt, for the most part. Yet Brazil, the world’s largest producer of coffee, was slapped last week with a 50 percent tariff. Brazil provides about 30 percent of the coffee consumed in the United States, so this will massively impact both coffee prices and the industry within U.S. borders.

The global coffee market has endured cascading crises in recent years: climate-related crop failures in Brazil and Vietnam, financial speculation and widespread shipping disruptions have all driven up prices. Roasters and importers were already struggling to keep up.

All of this comes on the heels of the covid-19 pandemic, which left much of the coffee industry on its knees. From shuttered cafes to broken supply chains, the pandemic erased years of progress for small and midsize businesses. For many, the current wave of volatility feels like a crisis that never truly ended.

Now, tariffs threaten to tip many over the edge. Small and midsize U.S. coffee companies often operate on tight margins and depend on direct sourcing relationships with overseas farms. When those beans arrive at U.S. ports, it’s the roaster, not the farm, that pays the tariff.

Organizations such as the National Coffee Association and the Specialty Coffee Association have expressed concern over the policy shift, citing potential damage to supply chain sustainability, transparency and affordability. Some importers might shift sourcing toward countries with exemptions, but in many cases the increased costs will all be passed on to you, the coffee lover. In response, some cafes have already raised prices by $0.50 to $1 per cup. Retail bags will soon follow, as higher costs ripple through the supply chain.

Many Americans support the administration’s trade policies as a way to bring back production from overseas and to pressure other countries to lower trade barriers. But tariffs on coffee make little sense on those terms compared with other goods: Because the United States can’t grow much coffee itself, all Americans get is upward pressure on prices without a boost to jobs.

In certain cases, the White House has made exceptions on tariffs for products that are critical to American life and that can’t be quickly or easily replaced. Surely, coffee is too essential and too global to put at the center of a geopolitical chess match.

Whether the tariffs deliver diplomatic wins remains uncertain, but their effect on the daily cup of coffee is already being felt and will get much worse. Things are beginning to get very dark: for the consumer, the countless coffee roasters, coffee importers and the 1.7 million people who work in the trade.

Todd Carmichael is co-founder of La Colombe, a coffee roaster and retailer.