Tea is a commodity that highlights the interdependence of nations where producers rely on buyers and non-producers depend on imports to satisfy demand.
US President Donald Trump has escalated the threat of higher tariffs by calling for “fair and reciprocal” duties on imports, effectively raising the cost of all imported goods, but selectively.
Trump’s Feb. 13 memorandum instructs his administration to eliminate trade imbalances by pursuing reciprocal tariffs against nations that put fees on US exports. He writes that the objective is to level the playing field by ensuring that US tariffs match those of other countries. Historically, the US has advocated for lower trade barriers. The policy reversal may prompt retaliatory duties, leading to trade wars like that underway with China.
Trade imbalances show the global division of labor and geography, traders say. Tea is a commodity that highlights the interdependence of nations where producers rely on buyers and non-producers depend on imports to satisfy demand.
In 2024, America imported approximately $522 million of tea, making it the second-largest tea importer globally (behind Pakistan, at $707 million, and ahead of Russia, at $488 million). The United States exports small quantities of tea, valued at $79 million in 2024.
Tea Association of the USA president Peter Goggi writes that tariffs negatively impact the American consumer. “The United States is not a tea producing nation. There is no commercially grown tea that requires protection via tariffs, nor are there any tea-related farm-based jobs that would be protected by these tariffs,” he writes.
Virtually every tea-growing nation erects trade barriers to protect domestic producers. Tariffs of 10%, 25%, or even 100% are not uncommon. Final Bound Duties (FBD) vary significantly by product (agricultural commodities vs. finished goods) and destination. The current global FBD for coffee, tea, cocoa, and spices averages 128.1%.
Trade imbalances naturally arise when a significant commodity producer, such as a tea-exporting nation, exports to non-producing or low-producing countries that produce little to no tea.
Consider India, which levies a 100% basic customs duty (BCD), charges an integrated goods and services tax of 5% (IGST), and a social welfare surcharge of 10% (SWS) on tea imports (more than doubling the cost for importers). The rates apply to both green and black teas, whether flavored or not.
India may need to negotiate tariff reductions or retaliate in response to increased US tariffs.
It is unclear precisely how the tariffs will be calculated, but analysts at Citi Research estimate India is at risk for losses as high as $7 billion annually. Trump made it clear that India will not be spared from reciprocal tariffs.
According to the COMTRADE database, in 2023, the US imported $56 million worth of tea from India. However, the US exported only $151,400 worth of tea to India, a significant disparity that applies to all of America’s major tea trading partners, including Sri Lanka ($37 million worth of tea imported vs. $13,410 US tea exported) and Argentina, which exported $66 million worth of tea vs. importing $1 million worth of coffee, tea and spices from the US.
Now consider Canada. Canada is the most important destination for US tea, importing $34.4 million in 2024, followed by the United Arab Emirates ($4.5 million), Japan ($3.7 million), Mexico ($3.33 million), and Saudi Arabia ($2.7 million). Germany, Australia, China, South Korea, and the Philippines import US tea valued at between $1.5 million and $2.5 million.
Canada imposes no duty on tea imported from the US. Currently, tea exporters exporting to the US under the USMCA free trade agreement ship duty-free. Tea companies located in non-treaty nations pay a relatively high 6.4% tariff. Canadian blenders shipping Chinese tea to the US pay 17.5% tariffs. The overall US tariff for imported goods averages 3.4%, while Canadian tariffs average 2.35% (Europe's tariffs average 5%).
Tea and Herbal Association of Canada President Shabnam Weber writes that Canada is threatened with a blanket 25% US tariff on all imported goods (including tea). According to the Bank of Canada, tariffs could lower Canada’s gross domestic product by 2.6% and lead to the loss of hundreds of thousands of jobs.
“For tea, the greater damage will be caused by how Canada responds. Newton's third law of motion says: For every action, there is an equal and opposite reaction. Based on the response the Canadian government gave on February 3rd, there will be a 25% tariff on all products coming into Canada from the United States, consistent with Newton's third law,” she writes.
“The vast majority of tea sold in this country is pre-packaged, a lot from the U.S. The consequences of these actions seem clear. These are not costs the tea industry can bear. They will hurt the Canadian economy, Canadian companies, and Canadian consumers,” she said.
Trump’s directive stopped short of imposing fresh tariffs, but the impact on the world’s 60,000 registered tea exporters and 64,000 tea buyers is already significant. China, for example, has identified Europe and the Belt and Road network as more promising markets than the US.
Chinese tea exports to the US surged in 2024, accounting for 9.6% of total US tea imports, making the US China’s eighth largest tea trading partner by volume.
Chinese Customs reports that exports to the US rose 37.5% in value, with a more modest overall increase of 1.8% by volume. Tonnage increased to 11,855 metric tons. Value grew by 9.4% to $6.139 million. Meanwhile, the average unit price of $5.2 per kilo fell by 20.5% compared to 2023.
China was America's third-largest tea trading partner in 2024, an unlikely outcome in 2025 after tariffs were increased to 17.5% and could be raised as high as 60%.
Many countries that export tea will lower tariffs for US buyers to avoid paying the onerous rates they charge importers. Since rates will be established bilaterally, evaluating levies imposed on US goods by other trading partners will require weeks or months of investigation. Priority targets appear to include Canada, China, Japan, South Korea, and the European Union, each critical to the tea trade.