President-elect Trump’s proposed trade policies indicate a significant shift toward protectionism, profoundly affecting global beverage trade dynamics.
The coffee industry’s most significant concern is that the US will impose uniform import tariffs of 10% to 20%, significantly increasing retail prices. The increased cost from tariffs is typically passed on to consumers. Imported coffee prices have already risen 65% since January 2021.
After the election, Dr. Michael Rodriguez at Columbia University told XLIII Coffee, “This is no longer a speculation but a reality that US coffee importers must face.” He said coffee prices in the US market are projected to rise by 15-20% over the next six months, creating ripple effects throughout the global supply chain.
In 2023, the United States imported approximately $8.2 billion of coffee, accounting for 18.7% of global imports. A 20% tariff could add $1.64 billion to the annual cost of coffee imports, which would rise to $9.84 billion.
US consumers now pay 20% more for ground coffee than in April 2023. In September, 100% ground roast averaged $6.47 per pound, up 6.3% (that average could rise to $7.44 per pound if tariffs add 15% to the cost of coffee imports). In Europe, coffee prices have increased by 16.9% in the past year. In November, a pound of ground roast coffee in the UK averaged £6.27 ($6.65).
Simultaneously, the US dollar has strengthened significantly following the election results. Sarah Thompson, an analyst at Morgan Stanley, explains: "While a stronger dollar provides short-term advantages for coffee exporters, businesses need long-term strategies to address potentially declining demand due to higher import costs.”
The coffee industry generates more than $200 billion in revenue globally. It provides livelihoods for approximately 125 million people, but exporting countries retain less than 10% of the value they generate by growing coffee.
In a 2024 article, the Specialty Coffee Association (SCA) highlighted that protective tariffs and other trade barriers "have historically limited coffee producers access to lucrative consumer markets, exacerbating global coffee supply chain economic disparities."
The coffee industry faced similar tariffs in a face-off with European agricultural suppliers during the last years of President-elect Trump’s previous administration. SCA members expressed apprehension about policies that could further disrupt trade and negatively impact the industry.
The National Coffee Association (NCA) has opposed previously proposed coffee tariffs, emphasizing increased consumer costs among potential negative impacts. In a November 12 alert to its members, the NCA did not mention tariffs but advised that the election results “are likely to cause substantial uncertainty for a wide range of issues that may directly or indirectly impact the US coffee sector and global supply chains.”
NCA CEO and President William “Bill” Murray said: “More Americans drink coffee each day than any beverage other than bottled water, and coffee is a cornerstone of US communities - supporting more than 2.2 million U.S. jobs and adding $343 billion to the economy every year. Coffee leaders look forward to working with the incoming administration to ensure Americans continue to have access to their favorite beverage, which cannot be grown in most of the United States, so relies on global trade.”
According to the Consumer Brands Association, food and beverage prices and inflation are expected to increase with tariffs, as tariffs are taxes “paid by US consumers and by US manufacturers” and not by foreign nations.
Since 2018, the USTR (US Trade Representative) has failed to heed the suggestions of US manufacturers, including America’s food, beverage, household, and personal care manufacturers, who had suggested a “scalpel, not a sledgehammer” approach, writes CBA.
Ipsos polling found that despite the likelihood of increased inflation and higher food prices, most US consumers (56%) favor Trump’s tariffs.
The president-elect also said he intends to renegotiate existing trade agreements to favor US interests, potentially leading to increased tariffs and stricter trade terms with Mexico, Canada, and European allies.