Why Americans’ morning coffee just got pricier: Trump tariffs hit top supplier, crackdown targets another
The imposition of tariffs on coffee imports and a crackdown targeting a key supplier for the American coffee market have led to significant price increases for consumers. Coffee shops and grocery stores have started passing on the costs to consumers.
Americans are now paying more for their daily coffee runs after US President Donald Trump slapped sweeping tariffs on the top coffee exporter and launched an anti-drug campaign targeting another key producer and supplier.
This impact is most immediately felt at the counters of local coffee shops and grocery stores across the United States.
Nikki Bravo, the co-owner of Momentum Coffee in Chicago, had to raise prices on lattes, cappuccinos and other drinks by about 15% last week after the cost of the coffee beans she uses increased by the same amount. She told Fortune she sources most of her beans from Africa.
“At some point, we just had to pass it along; we couldn’t continue to eat it,” Bravo said.
What does the data show?
The average price for a pound of ground coffee reached $9.14 in September, a 3% increase from the August average of $8.87 and a 41% jump from September of the previous year, according to US government figures.
This sharp increase follows a period of rapidly rising coffee prices throughout the year. The consumer price index, which measures a broader sample of all coffee products, including instant coffee, shows American coffee prices are up 19% compared to September last year.
What are the primary drivers?
Since the US grows very little coffee domestically and imports 99% of its supply, it is highly susceptible to trade policy changes.
Brazil is the top supplier of coffee in the US, as it exports 30% of the market. Tariffs imposed by the Trump administration — a 40% tariff on top of a 10% existing tariff — have caused Brazilian producers to withhold shipments while negotiating with American roasters over who will cover the added cost, thus reducing the supply in the US, Fortune reported.
Colombia, which supplies 20% of the US coffee market, is subject to a 10% tariff. Recently, Donald Trump threatened to impose even higher tariffs, along with putting an end to US aid to Colombia as part of an anti-drug campaign, pushing bilateral relations between the two nations to their worst point in decades.
Trump recently referred to Colombian President Gustavo Petro as “an illegal drug dealer” in a social media post. Petro responded to the name-calling by stating, “Mr. Trump has slandered me and insulted Colombia.”
Another supplier, Vietnam, which provides 8% of the US coffee market, has been subject to a 20% tariff since the summer.
Trump announced in September that “unavailable natural resources” could be exempt from tariffs for countries that have reached trade agreements with Washington, but so far, coffee hasn’t won any exemptions.
Bill to repeal tariffs
In response to these rising prices, a bipartisan group of US House members introduced a bill in September that would repeal all tariffs on coffee. The bill was sponsored by two individuals — Ro Khanna and Don Bacon.
“We only produce 1% of the coffee that Americans consume. It’s one of the best examples of Trump’s blanket tariffs making no economic sense,” US Rep Ro Khanna, a California Democrat, told Fortune.
Bacon said on Friday that he became interested in the issue after seeing how much coffee costs at the grocery store now. He said he’s also not a fan of tariffs and believes that only Congress and not the President has the power to levy them, Fortune reported.
Bacon thinks the Trump administration is gradually realising that imposing tariffs on products that the US can’t grow is bad for consumers. Hence, he is hopeful that the bill will pass. “I hope the president and Congress see the positive benefit of removing this tariff on everyday Americans,” he said.