How the tangled web of trade policy affects US coffee businesses.
As dawn breaks over misty coffee farms from Colombia to Vietnam—where the future of the $460 billion global coffee industry takes root each day—a significant shift in global trade policy is reshaping the economics and politics of our morning cup. President Donald Trump’s sweeping “Liberation Day” tariffs, announced on April 2, have rippled through the complexity of the global coffee market, leaving players at every level—importers, roasters, producers, and consumers—adapting to a landscape suddenly even more volatile than before.
When attempting to assess the impact of these tariffs on coffee, an industry that spans continents, economic systems, and cultural traditions, we bump into the fundamental challenge of perspective. Where you stand in the supply chain largely determines what you see: economic sovereignty or economic harm, necessary correction or needless disruption, opportunity or crisis.
As the US, the world’s second-largest coffee importer (consuming $8.2 billion worth annually), implements a new tariff structure with a baseline 10% tax on all imports, and country-specific tariffs up to 46% on nations like Vietnam, we’re witnessing a stress test of globalized supply chains that were already under enormous pressure. In announcing these measures, President Trump framed April 2 as “Liberation Day” and called it “our declaration of economic independence,” positioning the policy as essential to strengthening American manufacturing, reducing trade deficits, and generating revenue for tax cuts.
The Shifting Grounds of Trade
For decades, coffee has entered the US tariff-free—a reflection of the country’s near-total reliance on foreign production for a beverage that has become deeply woven into its cultural and economic fabric. Unlike industries like steel or automobiles, coffee has limited domestic production potential, which creates a fundamentally different context for applying tariffs.
The new structure imposes a baseline 10% universal tariff on virtually all imports, with additional “reciprocal” tariffs targeted at specific countries. The impact on coffee-producing nations varies widely: Vietnam faces potential tariffs of 46%, Indonesia 32%, while Colombia and Brazil contend with 10%. Implementation followed a two-tiered approach: a baseline 10% tariff took effect on April 5, followed by higher country-specific tariffs scheduled for April 9. However, on April 9, the administration announced a 90-day pause on these higher tariffs for most countries, maintaining only the 10% baseline. China remained a notable exception, facing much higher rates. Developments continue to unfold every day, spreading uncertainty through the markets.
According to the White House fact sheet on the topic, these tariffs aim to address “pernicious economic policies and practices of our trading partners” that “undermine our ability to produce essential goods.” Treasury Secretary Scott Bessent said recently during a speech at the Economic Club of New York that “access to cheap goods is not the essence of the American Dream” and that international trade relations “that do not work for the American people must be reexamined.”
This places coffee in an unusual position. As William "Bill" Murray, President of the National Coffee Association, points out, “Every dollar of coffee-related imports generates $43 in value for the American economy, and coffee supports 2.2 million US jobs.” The question becomes: how do we reconcile a policy designed to protect domestic industries with a product that, by its nature, cannot be domestically produced at scale?
Market Reactions: A Study in Contrasts
The market response has been as varied as the industry itself—a patchwork of adaptation, concern, and occasional opportunity. As one European trader noted in Reuters regarding Vietnam, “This is big. The tariff on Vietnam means $2,500 more per ton” for a US buyer. With robusta futures trading around $5,390 per ton in early April, this represents a significant increase for importers who operate on thin margins in a highly competitive market.
Coffee businesses across the US are responding with characteristic creativity and resilience.
Coffee businesses across the US are responding with characteristic creativity and resilience. Margaret Nyamumbo, who runs Kahawa 1893 and generates around $3 million in business annually, told local news that she would certainly have to raise prices if the tariffs remain unchanged. However, some companies are choosing to absorb costs to maintain customer loyalty. Andrew Sinclair, owner of Mad Lab Coffee in Los Angeles, told KABC his prices will remain unchanged: “If you had to pay $9 for a cup of coffee, I probably wouldn’t see you every day, and I like seeing people every day.”
Many coffee business owners and managers are hoping that the situation will resolve—i.e., the tariffs just go away, and they can get on with their already overly complex jobs. David Paparelli, CEO of M-Cultivo, said in an interview with STiR, “We have to level-set first on the tariff situation, and whether or not they will hold. And so, at this moment, I think the main impact is psychological: the markets, including the coffee market, are based on confidence. When you dilute that confidence, there will be fallout, usually in the form of increased price and increased interest rate.”
These market adjustments come at an already challenging time for the coffee industry, which has been navigating historically high prices due to climate change-induced supply shortages in major producing regions. A key question, as Paparelli said, becomes whether these tariffs represent a temporary adjustment or a fundamental restructuring of global coffee economics.
Historical Context and Domestic Possibilities
Coffee’s duty-free status in the US traces back to the 19th century—a pragmatic recognition of agricultural reality. Hawaii, Puerto Rico, and niche California farms currently produce less than 0.1% of the global supply, with domestic production valued at approximately $54.3 million in Hawaii as of 2019/2020.
Hawaii, Puerto Rico, and niche California farms currently produce less than 0.1% of the global supply, with domestic production valued at approximately $54.3 million in Hawaii as of 2019/2020. Photo credit: Nico Smit
“Coffee has actually been exempt from tariffs in the United States since the 1800s,” noted Cason Crane, CEO of Explorer Cold Brew. While acknowledging current limitations, Crane expressed hope that “the administration can negotiate some more targeted deals that recognize things the United States cannot grow coffee outside of Hawaii or Puerto Rico, which account for half a percent of worldwide coffee production.”
Some agricultural experts see potential in expanding domestic production, even if it remains niche. Research by the US Geological Survey indicates that shade-grown coffee in Puerto Rico could potentially serve dual purposes of biodiversity conservation and agricultural revitalization, offering a fascinating intersection of environmental and economic goals. However, significant challenges remain in scaling production to meet even a fraction of national demand: it’s hard to visualize a future where domestic coffee could satisfy the entire US market.
Critics frequently compare the “Liberation Day” tariffs to the Smoot-Hawley Tariff Act of 1930, which many economic historians believe triggered a global trade war and deepened the Great Depression. However, the administration cites a 2024 study claiming that tariffs during Trump’s first term “strengthened the US economy” and “led to significant reshoring” in certain manufacturing sectors. This fundamental disagreement about tariffs’ economic impact reflects broader debates about globalization, national sovereignty, and economic development that have intensified in recent years.
The Multifaceted Impact on Coffee’s Global Web
The ripple effects through the global coffee supply chain are multifaceted and contested, like threads being pulled in a complex tapestry, with each tug affecting the entire pattern. As Royal Coffee, a major green coffee importer, explained, “Let’s be clear—tariffs are taxes, paid not by foreign governments, but by American companies. That means us.”
Various outcomes are anticipated as the industry adapts:
● Consumer Price Effects: According to Yale Budget Lab, implementing the new tariffs would increase food prices by 2.8%, but coffee could see higher increases, given that the US imports 99% of its coffee. The administration contends that these short-term cost increases could be offset by longer-term economic benefits—a trade-off that’s hotly debated among economists and industry players alike.
● Supply Chain Adjustments: The high tariff on Vietnamese robusta coffee and other origins could lead to fascinating shifts in sourcing strategies, possibly benefiting other producing countries with lower tariff rates or creating unexpected alliances. President Trump has stated that such changes are intended to encourage more reciprocal trade relationships, raising questions about whether coffee, a product inherently tied to specific growing regions, can fit into a framework based on reciprocity.
● Trade Relationship Evolution: The new tariff structure could reshape trade dynamics, potentially leading to new negotiations with producing countries. The administration has indicated these tariffs can be lowered when trading partners “take significant steps to remedy non-reciprocal trade arrangements,” creating a complex diplomatic chess game with coffee as one of the pieces.
● Industry Adaptation: While small roasters and importers with thin margins may face challenges, this could also spur innovation in the industry. Larger firms like Keurig Dr Pepper may leverage their scale to adapt more quickly, while specialty coffee businesses may emphasize quality and experience to maintain consumer willingness to pay premium prices. This could accelerate existing trends toward premiumization and experience-focused offerings.
These market adjustments come at an already challenging time for the coffee industry, which has been navigating historically high prices due to climate change-induced supply shortages in major producing regions.
A Chorus of Perspectives
The coffee industry presents varied viewpoints on tariff policy—a microcosm of broader national debates about trade, globalization, and economic sovereignty. US Representative Lloyd Doggett tweeted on April 19, 2025, “Enjoy a cup of coffee? Expect higher prices due to Trump’s tariff tax since 99% of the coffee Americans drink is imported.”
In contrast, Speaker of the House Mike Johnson expressed confidence that despite initial difficulties, the policy would ultimately “make sense for Americans and help all Americans.” This reflects the broader political divide on trade policy that has deepened in recent years, with traditional partisan alignments increasingly blurred.
Industry leaders present differing assessments based on their position and perspective. Yannis Apostolopoulos, SCA CEO, told Daily Coffee News that tariffs exacerbate price volatility, potentially affecting producers and consumers in ways that compound existing challenges from climate change and market concentration. Bill Murray of the NCA has advocated for coffee exemptions, highlighting the industry’s economic importance and unique status as an essential import.
Some economists support the administration’s approach as part of a broader strategy. Treasury Secretary Scott Bessent said during his confirmation hearing, “The goal of tariffs is to increase US industrial capacity, create and protect US jobs, and to protect our national security by ensuring our supply chains, particularly for our military, are not reliant on our adversaries.”
Businesses are adapting differently based on their size, resources, and market position. While some small companies report existential challenges, larger players like Starbucks leverage global supply chains to mitigate impacts as they navigate the new trade environment, an advantage unavailable to smaller operators who lack the scale and resources for such flexibility.
Navigating Uncertainty: The Path Forward
The coffee industry approaches a pivotal moment where economic policy, consumer preferences, environmental concerns, and global relations converge. The 90-day pause provides a window for negotiation and adaptation, with differing views on what may follow.
The administration has emphasized that tariffs can be modified based on how trading partners respond. The White House fact sheet notes that President Trump has the authority to “decrease the tariffs if trading partners take significant steps to remedy non-reciprocal trade arrangements and align with the United States on economic and national security matters.” This creates both uncertainty and opportunity for producing countries seeking to maintain access to the valuable US market.
Some economists project significant economic downsides. JPMorgan has increased its odds of a US and global recession to 60%. The libertarian Cato Institute warned that tariff levels were approaching those of the 1930 Smoot-Hawley Tariff Act, drawing historical parallels that many industry veterans find troubling.
However, administration supporters project positive outcomes. The president has stated that tariffs are “going to give us growth” and has framed them as a way to help the government rely less on income taxes for revenue. Some supporters suggest tariffs could help restore American manufacturing capacity, which they view as vital for national security and economic sovereignty in an increasingly fractured global system.
The Delicate Balance
The coffee industry now navigates competing priorities: supporting international trade relationships that provide essential imports, addressing trade imbalances that concern policymakers, maintaining affordable prices for consumers, and ensuring the long-term sustainability of the entire supply chain from farm to cup.
National security dimensions add complexity and weight to what might otherwise be purely economic considerations. The administration has framed industrial capacity as a security concern, arguing that what began as economic decline becomes a security liability exposed during military conflicts. As the Center for Strategic and International Studies notes, some in the administration believe “the ‘arsenal of democracy’ has been allowed to rust, while China has assembled the very industrial capacity that once defined US strength.”
As the coffee industry navigates these crosscurrents, adaptability and innovation are more necessary than ever. Whether through advocating for exemptions, exploring domestic production possibilities, diversifying export markets, creating new technological solutions to old problems, and innovating in product offerings, the industry must continue to demonstrate resilience in the face of shifting trade policies.
Like so many aspects of our interconnected global economy, the story of coffee tariffs is still being written—cup by cup, trade deal by trade deal, policy by policy. Hold on tight—the future will be interesting!