US coffee drinkers to be hit with brutal double shot after Donald Trump tariffs

US Coffee Drinkers to Face Higher Prices Due to New Tariffs

American coffee consumers should prepare for increased costs for their daily caffeine fix as recently implemented tariffs targeting major global producers are set to impact prices. The cost of sweet treats may also rise, as chocolate imports are similarly affected by the new trade measures.

Tariffs Target Key Coffee-Producing Nations

The levies, impacting coffee imports from Brazil, Colombia, and Vietnam, are anticipated to drive up prices in retail stores and coffee shops across the United States. This development occurs amidst existing upward pressure on bean prices due to ongoing supply constraints. Imports from Colombia and Brazil, leading producers of premium arabica coffee beans, will be subjected to a 10% tariff under the newly enacted measures.

Vietnam Hit with Steeper Tariffs

Vietnam faces even more significant tariffs, with a substantial 46% levy imposed on its exports. The Southeast Asian nation is a primary global source of robusta beans, a less expensive variety commonly used in instant coffee, and a major coffee exporter to the US.

Expert Warns of Consumer Impact

“Ultimately, the USA is the largest global importer of coffee and a nation of avid coffee drinkers. Therefore, consumers will bear the brunt of these tariffs,” cautioned Kona Haque, head of research at commodity trading firm ED&F Man, in a statement to the Financial Times.

Immediate Cost Increases Expected

Haque explained that the tariffs would “immediately” inflate the cost of green coffee, or unprocessed beans, for roasting companies, which would “inevitably” be passed on to consumers in the form of higher prices for brewed coffee and related products.

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Limited Domestic Production Capacity

She further noted the unique nature of coffee and chocolate compared to industries like automotive or shipbuilding, which the tariffs are intended to bolster domestic production of. “The USA simply lacks the capacity to produce these commodities domestically,” Haque stated, highlighting the reliance on imports.

Existing Market Pressures Compound Price Rises

Coffee prices were already experiencing downward pressure in recent months due to unfavorable weather patterns in critical growing regions, including Brazil. Simultaneously, cocoa prices have nearly tripled over the past year, driven by severe weather events and disease outbreaks affecting harvests.

Cocoa Imports Also Impacted

Ivory Coast, also known as Côte d’Ivoire, the world’s top cocoa producer, has been targeted with levies of 21%, further exacerbating the situation for chocolate manufacturers and consumers.

Chocolate Industry Already Facing Inflation

Even prior to the implementation of these tariffs, Dirk Van de Put, CEO of Mondelēz, the company behind brands like Oreo and Toblerone, revealed in February that the company was grappling with “unprecedented cocoa cost inflation,” signaling existing challenges in the chocolate market.

US Dependence on Imports

The United States produces a negligible amount of its own coffee and cocoa, with Hawaii serving as the primary domestic source for both commodities. According to Lucrezia Cogliati, Commodities Analyst at BMI, US domestic coffee production accounts for approximately “0.2% of its total consumption,” underscoring the nation’s reliance on international suppliers.

American Coffee Consumption Statistics

Americans consume an estimated 146 billion cups of coffee each year, positioning it as the second most popular beverage after water. Data from Joe’s Garage Coffee indicates that 63% of Americans habitually consume coffee every morning, demonstrating the widespread popularity of the drink and the potential impact of rising prices.