Impact of tariffs on coffee: Summary
- Tariffs are hitting coffee globally
- Some companies are considering moving production to the US to avoid being hit
- Brazil faces 50% tariffs, meaning a sharp drop in Brazilian coffee imports to the US
- Tariffs could raise US coffee prices by the year’s final quarter, depending on blends
- Asia is becoming a more attractive market for coffee producers
Coffee has already had a bad time of it recently. Pressures from weather patterns, particularly in the case of higher quality Arabica beans, have affected yields and pushed up prices globally.
Coffee production could now see a further obstacle, with US tariffs hitting key producers around the world.
Could coffee production be moved to the US?
Importing products into the US is becoming more expensive for all sectors due to the presence of high tariff barriers. This has the potential to lead companies to move production into the US to cut some of the costs incurred.
The coffee sector is one such sector that could do this, explains Thijs Geijer, sector economist for food and agriculture at ING bank. Some coffee companies, such as Lavazza and Illy, have already hinted at this, moving production away from European coffee hubs such as Switzerland and into the US.
This would “not be good news for Europe,” Geijer points out, as it would reduce the market size for coffee in the continent.
Not only would they be able to avoid tariffs through this method, but also escape costs of compliance with the European Union Deforestation Regulation (EUDR).
However, there are drawbacks to this approach, including the exorbitant time and costs of setting up new facilities.
How are tariffs affecting prices for consumers?
Coffee prices have already been hit by poor harvests, but tariffs have the potential to impact them further.
Coffee roasters are currently using their existing inventories, so coffee affected by tariffs has yet to hit US shelves. But, explains ING’s Geijer, this may not last long and coffee supplies affected by tariffs may reach consumers in 2025’s fourth quarter.
Whether this will actually affect prices will depend on whether roasters want to keep pre-existing quality, in which case prices will go up, or push prices down by developing blends.
In Europe, the strength of the Euro has so far mitigated some of coffee’s price increases, as the commodity is traded in dollars. Tariffs are unlikely to push prices up further for consumers, suggests Geijer.
However, neither will they come down. The EU may attract some additional coffee shipments due to the tariffs, explains Justine White, senior market insights analyst at market analytics company Vesper, but this will not be enough to bring prices down in Europe to a noticeable extent, unless there is additional easing elsewhere.
Could coffee companies pivot to Asia?
While the coffee market is already far too developed in Europe for tariffs to make it more attractive, the same cannot be said for Asia.
Countries such as China already have a burgeoning coffee market, and the dissuasive power of tariffs has the potential to make such markets more attractive.
“If you’re looking for the long term structural growth, these countries have been in scope already for a while. [Tariffs] might be another reason to really double down on growing in these countries,” Geijer suggests.
How are tariffs affecting coffee producers?
The world’s biggest coffee producer, Brazil, has been hit by 50% tariffs by the US. Switzerland, which does not grow coffee but is a leader in roasting and exporting, has also been hit hard with a 39% tariff.
Other key coffee producers, such as Colombia and some Central American countries, have only seen 10% tariffs.
This has the potential to fundamentally reshape the coffee sector, giving advantage to some producers and disadvantage to others. “Countries with lower tariffs have seen their competitive position improve” explains Geijer.
The impacts of this are being seen already. Imports of Brazilian coffee to the US in August were down by 75% compared to 2024. Meanwhile, imports from Colombia and Vietnam remained stable.
Nevertheless, for Brazilians themselves, things aren’t looking so bad. “Higher prices in 2023/24 and 2024/25 encouraged farmers to sell their coffee, putting them in a better financial position and a position wherein they can afford to build up a bit of stock while the trade picture is uncertain,“ explains Vesper’s White.
“The state is also stepping in to support farmers, to finance the current harvest.”
Meanwhile, volumes of coffee capsules from Switzerland being imported into the US have also seen a steep drop, while those from Italy remained stable.
