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US President Donald Trump has just begun his term and has already threatened tariffs on two key coffee origins. What might his presidency mean for roasters and the wider coffee industry?
Within his first two weeks back in the White House, President Donald Trump has threatened to impose import tariffs on Colombia and Mexico, two of the United States’ (US) largest import coffee markets. Taking into account these early political moves, what could be in store for the global coffee industry for the remainder of Trump’s term?
On 26 January, in retaliation to the Colombian government turning away American military planes carrying deportees, President Trump threatened a 25 per cent emergency tariff on all Colombian exports. Although the tariff threat was later rescinded, it sent ripples throughout the global coffee industry.
Colombia is the third largest coffee-producing country in the world, behind Brazil and Vietnam. With approximately 30 per cent of the US’ coffee imports coming from this origin, the President’s decision sent coffee prices into mild fluctuation.
A week later, on 1 February, a 25 per cent tariff was imposed on imports from Mexico and 10 per cent on imports from China, to hold the countries “accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs [from entering the country]”.
Mexico’s coffee production in 2023-24 was estimated at 3.86 million 60-kilogram bags, with 1.33 to 1.46 million 60-kilogram bags exported to the US. A tariff would be hugely detrimental to Mexico’s coffee market, as the US is its primary destination receiving around 50 to 55 percent of the country’s total coffee exports.
The coffee market has experienced some volatility alongside these touch-and-go policies, with Arabica coffee futures trading at US$3.84 as of 4 February – a 21 per cent increase over the past month and more than a 100 per cent jump compared to a year ago.
However, the impending tariffs did not cause this increase – poor weather conditions in key origins such as Brazil and Vietnam led to a market surge in late 2024, and prices have been steadily increasing since. But what impact could introducing uncertainty into an already volatile market have on the US market and the broader global coffee industry, and how can players along the supply chain – particularly smaller to mid-size roasters – navigate these challenges?
Whether or not a tariff is imposed, coffee prices remain high and are likely to keep rising. Resilience will be key in weathering any potential political storms ahead.
Uncharted waters
Michael Meates, Founder of New York-based consulting firm Day For It Hospitality, specialises in supporting small businesses and expects at least some supply chain instability.
“The instability of the current political situation in the US makes it hard to predict anything in the market. It’s uncontrollable,” he says.
“The threat of the emergency tariff on Colombian imports was just a threat. But what happens if one day it does go through?”
He explains that if a tariff were to come into play, roasters will have to quickly adjust their strategies. They’ll need to pivot their sourcing from one origin to another, with agility and speed to stay afloat.
Strategies could include diversifying sourcing origins and shifting to countries that are not subject to tariffs. Roasters, for example, would need to stay informed about the evolving market conditions and potentially form new partnerships with importers who can source coffee from these alternate regions.
Product offering adjustment could provide a less expensive alternative to offset the costs of rising prices – this may entail blending lower-cost beans with higher-quality ones to try and maintain a premium flavour profile.
“From both a producer and green coffee buyer’s perspective, as well as from the roaster’s side, they just need to be more attentive. They need to be checking daily on what’s going on, staying informed so they know if prices shift. You can lock in prices at a certain rate if they change, but until things come in, there’s no need to pivot prematurely,” says Meates.
“As much as you’d like to predict what’s coming, you won’t be able to. It’s too sporadic and it’ll happen suddenly. A lot of people lock in their prices well in advance, but it’s about the next lots, what’s coming up, and how to navigate that.”
The real impact, according to Meates, will be felt most in the affected origin countries where smaller producers may struggle. The primary impact will not be on the larger players but rather on the smaller entities, such as micro-lot producers, independent green buyers, and companies focused on direct sourcing or farm-to-cup models.
“It’s the small farmers who’ve fought for years, navigating cartel control and trying to become self-sufficient. These farmers aren’t wealthy by any means, but they’re doing well by their standards, providing for their communities and building a future for the next generation,” says Meates.
“Then, when something like this happens and they’re told they can’t sell their coffee to the biggest economy in the world, it’s incredibly difficult and it’s out of their control.”
While the world has seen President Trump’s leadership style before, his use of tariffs as leverage was not as frequently used during his previous term, making trade predictions and market implications more difficult to forecast.
“He didn’t use these kinds of tactics before. I think he’s coming at it from a different angle now, especially in relation to immigration,” says Meates.
“He did come out with some extreme statements last time, but now, it’s more like he’s coming in with authority and trying to set a precedent.”
The impact of tariffs extends beyond the bean, with countries such as China now in the firing line. Companies that rely on Chinese manufacturers for equipment may face higher costs due to tariffs on these imports, making products such as coffee roasting machines, grinders, and brewing equipment more expensive.
What’s more, coffee packaging and accessories, including items such as bags, labels, and materials, are frequently sourced from China. The rise in costs for these goods may lead to higher operational expenses for roasters and café owners, with small roasters being particularly affected as they often depend on more affordable equipment and packaging.
“It’s not just about coffee itself, it’s everything that comes with it. For example, coffee bags that come from China, all the materials and components – it’s not just about wholesale coffee and retail production. There are a lot of pieces involved,” says Meates.
Hypothetically, he explains this will have the greatest effect on the smaller to mid-size players.
“The big guys often have their own farms, or they’re part of groups that own both farms and coffee shops. So it all ties together. Some people have locked in contracts well in advance, but others just own the farms outright,” says Meates.
“I think independent and smaller roasters, who were already struggling with thin margins, will feel the squeeze. You really don’t want to keep increasing prices, but if that’s the only way to stay afloat, you have to do it.”
Meates explains the tariffs may have more of an effect on mass consumption culture in America, as specialty coffee is not as mainstream as its United Kingdom or Australian counterparts.
“The margins in mass consumption are huge. Coffee education is growing here, but the US is still about 20 to 30 years behind countries who are leaders in specialty coffee.
On the espresso side, the quality bean experience – what we’d consider a premium experience – is still a small percentage of the market,” he says.
While larger chains may have some flexibility due to their scale, by locking in bulk contracts or sourcing directly from farms, smaller operators in the mass consumption market lack those advantages. They’re more exposed to market fluctuations and face higher risks of customer churn if prices rise.
Consumers in this segment are considered to be more price-sensitive, and even modest price hikes could push them to switch to cheaper alternatives. So, for mass consumption brands, the cost of rising coffee prices doesn’t just hit the bottom line, it risks eroding their customer base especially if price increases aren’t managed carefully.
Stay calm
Eric Lauterbach CEO and President of Peet’s agrees, saying a certain degree of unpredictability is expected in the market, but it’s important to carefully assess the situation first.
“Coffee has been pretty stable for a long time, but I think it’s going to get much more unpredictable,” says Lauterbach.
“But, before reacting in the moment, it’s crucial to think through contingencies.”
Lauterbach says Colombia is a major source for Peet’s, accounting for approximately 14 to 15 per cent of its purchases, and when occurrences such as the threat of emergency tariffs arise, everything can change overnight.
“The temptation might be to immediately raise prices or make other quick moves, but that’s not the right answer,” he says.
“The real question is: how do companies respond in a way that makes sense for the long term?”
With the unpredictable nature of international trade and the potential for further tariffs to impact the coffee industry, Lauterbach says companies will need to carefully navigate the shifting landscape as they identify a response that makes sense for them.
“It’s important to stay flexible and stick to your principles. At the end of the day, everything the coffee industry sells is imported,” he says.
“But we’ll continue developing ways to produce here in the US and create jobs as we stay on top of the shifts.”
The post Coffee and Trump: trade, tariffs, and turbulence? appeared first on Global Coffee Report.
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