- Arabica prices recently surged to $4.30/lb – only to later drop 60 cents amid tariff panic
- Trump’s reciprocal tariffs (and the subsequent pause) is reshuffling global sourcing, including for coffee
- However, uncertainty is the real tax – and few can afford it
FEW sectors are as globally enmeshed – and as politically exposed – as coffee.
In recent weeks, Donald Trump’s proposed tariffs on coffee imports have sent shockwaves through the industry.
Announced as part of a wider protectionist push ahead of the 2024 election, the tariffs initially imposed a blanket 10% on imports – including green coffee, but quickly escalated into a more complex and selective structure: Steep reciprocal tariffs targeting countries accused of trade imbalances, with major robusta exporters like Vietnam and Indonesia facing some of the highest rates.
Then came the pivot. Facing mounting backlash from industry groups and jittery allies abroad who were “getting yippy,” Trump announced a 90-day pause on the new tariff rates – while simultaneously doubling down on China, hiking tariffs to 125% and adding a fresh 20% “fentanyl levy” just yesterday. The result: a full-blown game of economic chicken with Beijing, raising the stakes of the global trade war.
“The 90 day pause gives room for negotiation,” says Judith Ganes, President of J Ganes Consulting. “The 10% global tax is still being implemented and that will have a trickledown effect. I also think coffee – which is not grown at a large enough scale in the U.S. to meet demand – will ultimately be exempt from the 10% tariff.”
Will the fact that coffee is considered a daily necessity by most Americans ultimately shield it from long-term tariffs? Perhaps. Meanwhile, current implications remain disruptive.
Tariffs, prices, policy uncertainty, and coffee
For the coffee industry, the implications are neither straightforward nor short-term.
“The coffee market, like other commodities, is highly efficient at adjusting to new economic realities,” says Judith.
“While long speculators may have exited, it was for good reason – there were clear macro shifts. It wasn’t speculators driving prices down, but broader global dynamics, with recession fears growing louder. The market was already vulnerable before the tariff news hit, struggling at the highs with softer differentials and wider arbitrage encouraging demand shifts.”
The original tariffs came at a delicate moment. The global coffee economy has been reeling from several years of climate-related production shocks – most notably in Brazil – alongside pandemic-era logistical disruptions and mounting inflation.
Futures prices have surged in response to deepening supply concerns, with arabica recently surpassing $4.30 per pound – its highest level to date. The spike follows months of compounded weather disruptions in Brazil and Vietnam, combined with tightening global stocks and strong speculative interest.
Meanwhile, robusta prices have also reached record highs, as roasters sought cheaper alternatives amid soaring arabica costs and global inflation. The result is an unprecedented squeeze across the value chain, from exporters to end consumers.
“Brazilian exports didn’t see the expected drop, cert stock decline slowed, and Vietnam resumed stronger shipments,” says Judith. “Both countries saw record revenue from price gains, and if weather holds, farmers will likely expand production. In a sense, the market was tapping the brakes to avoid future overproduction.”
With Trump’s tariff policy, that trend was upended – at least momentarily. When the reciprocal tariffs were announced, prices for green coffee plunged by nearly 60 cents per pound, reflecting market expectations that roasters would push the tariff burden back down the chain.
Many actors across the coffee value chain have been struggling, with some exiting the business entirely. Social media channels are seeing a wave of announcements from small roasters and importers shuttering operations, unable to sustain cash flows in a climate of unpredictability.
But when the 90-day pause was confirmed, prices bounced back, erasing much of the initial drop. It was a stark reminder of just how jittery the futures market is. And although the tariffs are paused, the original 10% blanket rate still stands – a cost most businesses hadn’t budgeted for and may not survive.
Resilience and risk – who wins, who loses?
Not all countries – or companies – will feel the pinch equally.
Brazil, already the world’s largest coffee producer, stands to benefit. With diversified production that includes both arabica and robusta, robust shipping infrastructure, and historically close ties to the U.S., Brazil appears well-positioned to solidify its dominance.
Analyst Alexander Barrett recently noted that “Brazil just won the coffee wars.” Indeed, its capacity to absorb shocks and offer scale gives it a structural advantage. In states like Espírito Santo, investments in robusta production have been ramping up, with exports climbing steadily. Even with moderate tariffs, Brazil remains competitive despite its climate change-related production issues, especially if Vietnam and Indonesia become pricier for American buyers.
Should reciprocal tariffs resume in 3 months, Colombia may also find unexpected upside. Washed arabicas from Colombia, long considered premium, had been undercut by the rise of high-quality robusta. But tariffs on Vietnam may reverse that trend, making Colombian beans more appealing once again to U.S. roasters. Still, with domestic challenges like labour shortages and climate pressures, Colombia’s ability to ramp up production quickly is limited.
Vietnam and Indonesia, by contrast, find themselves in a precarious spot. Unlike Colombia, which has invested heavily in promoting origin-branded, higher-value washed arabicas, Vietnam and Indonesia (with exceptions) are more often part of bulk commodity supply chains. Their economies also have less capacity to absorb shocks compared to Brazil, for example.
Despite the pause, the threat of tariffs has already disrupted contracts and spooked buyers. The irony is sharp: having built reputations for quality and reliability, they now risk being punished for geopolitical alignments they can’t control.
Crucially, the impact is not only national. Vertically integrated, capital-rich traders and multinationals may have the capacity to absorb short-term volatility. Smallholder cooperatives, farmers, and specialty traders will struggle.
Tariffs don’t just tax goods – they tax trust, timing, and scale.
Meanwhile, U.S. consumers were initially expected to shoulder the costs. A Reuters report in March 2025 warned of “double-digit coffee price hikes by year-end,” a prediction that commodity analyst Javier Blas also made a few weeks prior in a popular Bloomberg Opinion video.
But when prices fell in response to tariff panic after Trump’s “Liberation Day,” it seemed roasters might pass the pain down the supply chain instead. For exporters and producers in origin countries, that’s a familiar story: Being at the mercy of markets they don’t control.
“The burden of trade policy tends to be pushed back downstream with roasters concerned that price hikes will hurt demand,” says Judith. “Either way it is producers that get hurt in the end, because it becomes more difficult to sell their coffee or the price declines to counter this.”
“Retail prices have been rising to reflect the price climb and heaping tariffs on top of that probably reaches a breaking point for consumers but also for coffee operators to function if they can’t pass the costs along.”
Uncertainty is the name of the bigger game
For Trump, tariffs serve multiple functions: They project strength, signal loyalty, and offer leverage. His strategy appears rooted in deliberate disruption, with some critics calling out market manipulation.
By making sudden, bold announcements – then walking them back or escalating them further – he injects maximum uncertainty into the market.
This keeps stakeholders on edge, and allows insider trading in Congress and for those with privileged access to benefit from insider timing, with calls for accountability multiplying to put a stop to such practices. It also sets up a form of economic shock therapy that some are calling “the Trump shock:” What once seemed radical, like a 10% tariff, begins to feel tolerable when weighed against harsher reciprocal measures.
The chaos itself becomes a tool – normalising disruption, shifting baselines, and softening resistance to his original policy aims. In this environment, market movements are increasingly detached from supply and demand fundamentals, driven instead by political signals and speculative reaction, compounding the volatility for producers and traders alike.
The tiered structure – lower tariffs for allies like Colombia and Brazil, harsher ones for trade “offenders” – reflects more than economic logic. It’s diplomacy through taxation. “Do not retaliate, and you will be rewarded,” said U.S. Treasury Secretary Bessent on Wednesday – making that message clear.
The recent escalation with China suggests a broader objective: To create a wedge between the U.S. and other global suppliers. By pausing tariffs for non-Chinese partners while hitting Beijing harder, Trump is effectively telling the world: Stay close to Washington, or pay the price.
But the ripple effects are more diffuse, as confirmed by the World Trade Organization’s response to this trade war, in a statement by Dr. Ngozi Okonjo-Iweala, Director-General of the WTO:
“This tit-for-tat approach between the world’s two largest economies – whose bilateral trade accounts for roughly 3% of global trade – carries wider implications that could severely damage the global economic outlook. Our assessments, informed by the latest developments, highlight the substantial risks associated with further escalation.”
Many coffee companies source packaging, merchandise, and equipment from China. A roaster in Ohio might rely on Vietnamese beans and Chinese grinders – both now at risk of tariff hikes. The cost of doing business is rising across the board, particularly for small to medium-sized businesses.
“The trade war with China is especially worrisome because this industry also relies on packaging and supplies from China,” says Judith. “Cups, spoons, stirrers, lids, napkins, are mostly Chinese imports, as are some of the larger equipment purchases and additional items sold in the typical cafe.”
“That is going to impact sales. Many of the shop owners relied on these additional products’ sales to cover their operational costs. The trade war is not good for China or the United States – we will see who flinches first. I believe there will be a de-escalation – it’s just a matter of how soon that will happen.”
Meanwhile, can China fill the gap as an alternative coffee market to the U.S.? Its coffee consumption is growing – up nearly 15% annually by some estimates – but per capita intake remains low. Regulatory complexity also hampers market entry. The EU, with its sustainability credentials and stable import regime, may offer more immediate promise. Yet even here, rules like the new EU Deforestation Regulation create additional compliance costs that smaller players may struggle to meet.
A potential silver lining for coffee origin countries – contingent on factors such as infrastructure, regional trade frameworks, governance, and investment – may lie in the strengthening of intra-regional trade, deeper South-South cooperation, and the development of local value addition alongside more resilient regional value chains.
One thing is certain: The uncertainty is deliberate.
Trump’s trade policy thrives on disruption, recalibration, and ambiguity. By rattling markets and pausing just short of the brink, he exerts maximum influence with minimal political cost – while the financial burden is shouldered by producers, small businesses, and consumers around the world.
Coffee Intelligence
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