President Donald Trump is threatening a 50% tariff on Brazil, the leading producer of green coffee beans. That could lead to an increase in coffee prices.
Major US trading partners respond to 30% tariffs
Major trading partners have responded to President Donald Trump’s announcement of 30% tariffs on goods from certain countries and say they want to trade.
- If Brazil’s 50% tariffs are retained, coffee prices are expected to rise.
- The droughts in Brazil and Vietnam have already seen coffee prices rise.
- Price increases are particularly noticeable at grocery stores.
The biggest part of waking up? If you’re pinching a penny, it may no longer be a fresh coffee.
On July 9, Trump threatened a 50% tariff on Brazil, one of the largest suppliers of green coffee beans in the United States since August 1st.
“Americans will feel the impact of tariffs on morning brewing. That’s a very large tax on major coffee producers,” said David Ortega, professor at Michigan State University, adding that consumers will notice high prices within months of the new tariffs being put into effect.
Why are coffee prices so high now?
Tariffs could put more pressure on industries that are already navigating the recent price surges driven by droughts in countries such as Brazil and Vietnam. As of June, the price of 1 pound ground roast coffee was up $8.13 from the previous year’s $6.25, and $4.52 in 2020, according to the Bureau of Labor Statistics.
“Inventory was declining, but demand remains as high as ever,” said Ron Krunik, owner of Superior Coffee Roasting, a roaster for Sioux St. Marie, Michigan.
Kurnik, 49, said a pallet of imported green coffee beans, which cost around $6,000 a year ago, is close to $9,000 today. He also said he faces higher packaging costs as most of his packaging is shipped from China due to tariffs.
It’s converted to a higher price for his customers. As of June 1st, a 12-ounce bag of excellent roasted coffee coffee ranges from $11.99 to $13.99.
Kurnik warned that an almost 17% increase was just the first of a series of pricing changes, especially in the case of Trump’s tariffs on Brazilian holdings.
“About a third of our purchases go to Brazilian coffee, which is definitely one of our staples,” he told USA Today.
His roaster is far from the only business that is heavily leaning towards imports from Brazil. According to the US Department of Agriculture, approximately 80% of US unroasted coffee imports were sourced from Latin America in 2023, with Brazil accounting for around 35% of these imports.
To keep costs down, Kurnik is considering sources more coffee from alternative countries such as El Salvador and Colombia. He said buying from local producers is not an option. Hawaii and Puerto Rico grow coffee, but the quantity is too low and the price is too high to replace imports completely.
“It’s just going to be a really bumpy ride that tries to navigate where we buy, what we’re going to buy,” Kurnik said. But “I’m still optimistic, if not, you shouldn’t own a business.”
The impact of rising coffee prices in the US will be widespread in the US. The National Coffee Association estimates that two-thirds of American adults drink coffee every day, with consumers spending nearly $110 billion on drinks each year.
Price increases are expected to be the most prominent in grocery stores, and will have less impact in coffee shops. Large coffee house chains tend to lock in long-term contracts with a variety of suppliers, and the final price of store-bought lattes is more affected than the price of coffee beans.
“There’s a lot more value that you’re paying at a coffee shop,” Ortega said. “So it really depends on the type of coffee you’re buying and where it comes from.”
Still, coffee house prices are rising. Kurnik said his coffee shop, Superior Cafe, hiked prices for coffee-based drinks ranging from 25 to 50 cents in June.
Other morning staples are more expensive
Other breakfast staples are more susceptible to higher prices over the coming months.
According to Reuters, Brazil is the top US Plus supplier, and orange juice prices could be higher if tariff threats are retained as high demand from Japan’s record high temperatures and suppressed production are raising the price of matcha.
Ortega said other caffeinated drinks, such as energy drinks and soda, can see boosts from higher coffee prices at the margins, but “for most people, there’s no easy alternative to morning coffee.”
“When it comes to our coffee culture, coffee is the main source of caffeine you get on American mornings,” he said.
This year’s coffee prices will depend on whether or not the tariffs will be retained in the end. In June, Agriculture Secretary Brook Rollins told the Wall Street Journal that the Trump administration may consider exceptions to produce that cannot be easily grown in the United States, including coffee.
