What’s new with tariffs on coffee?

According to President Trump, “tariff is the most beautiful word in the dictionary.” But the repercussions for businesses and consumers worldwide have been drastic. And in recent months, coffee tariffs – long a relatively sleepy part of trade policy – have become central to industry conversations and forecasts.

Exporters are uncertain, roasters are re-pricing, and consumers are paying more for their comfort beverage.

More recently, America has escalated tariff threats against key Latin American suppliers, notably Colombia and Nicaragua. Meanwhile, Washington and Hanoi are moving in the opposite direction, potentially easing duties on Vietnamese beans. Finally, the latest news has seen lawmakers resisting new levies on Brazil even as higher prices feed into inflation statistics.

Together, these conflicting pulls risk fragmenting the global coffee market just as climate change and labour costs push prices higher.

“In a normal market – one where we’re not breaking price records twice in eight months – a 10% tariff across all imports might be manageable,” says Christopher Feran, Consultant at Hinterland Coffee Strategies. “But tariffs are applied on already inflated export prices, so the impact gets multiplied.”

“Many roasters delayed raising retail prices, hoping the market would cool or exemptions would come through. Now we’re feeling the combined effect of elevated coffee prices since last October and tariffs hitting summer deliveries. And the real squeeze hasn’t even arrived yet: Brazil’s exports to the US reportedly fell by more than 80% after the 50% tariff took effect in August. We’re only now entering peak shipment season.”

Colombia and Nicaragua face potential higher tariffs

Colombia, the world’s third-largest coffee producer, currently faces a 10% tariff on most of its imports – the baseline level President Trump has imposed on many countries. Late last week, however, he hinted that he would raise tariffs and stop financial aid for Bogota, and Colombia said on Monday it had recalled its ambassador from Washington.

This marks a sharp escalation in a feud with a country that has long been one of Washington’s closest Latin American allies. President Trump has rejected an established idea about countering the narcotics business: that free trade can make legitimate exports more attractive than drug trafficking.

But according to analysts, steep tariffs would hit legitimate businesses. Alienating Latin America also provides an opportunity for China to form a closer partnership with Colombia, as it has done with Brazil.

For Colombia, such a threat strikes at a core export. Roughly 40% of its coffee shipments head to the United States. Even modest tariff changes could pummel farm incomes in regions already grappling with higher fertiliser and logistics costs. Arabica futures, which rose about 22% over the past year according to ICE exchange figures, may surge further if trade barriers are erected against such a consequential supplier – one that is also reportedly having a banner year.

Neighbouring Nicaragua faces an even more explicit challenge. The US Trade Representative recently concluded an investigation into forced-labour allegations under the Ortega administration and proposed tariffs of up to 100% on Nicaraguan goods. Though the final list is yet to be confirmed, coffee – one of Nicaragua’s top agricultural exports contributing over 20% of agricultural GDP – is almost certainly in the crosshairs.

Such duties could be devastating. A tariff doubling the landed cost of Nicaraguan beans would effectively price them out of the US market, pushing roasters toward alternative suppliers and further limiting choice.

Vietnam may regain favour

If Latin America is losing trade favour in the US, Vietnam may be regaining it. In late October, President Trump signaled that tariffs on Vietnam, including coffee – imposed during his earlier term – would be lifted as part of a new trade deal under negotiation.

The new deal would exempt it from a 20% headline tariff. “We want to get coffee down a little bit,” the US President told reporters, adding that he might visit Vietnam.

For a country that has become the world’s second-largest producer by focusing on low-cost robusta beans, the move represents a win for industrial-scale farming and integrated supply chains.

American roasters that blend robusta into instant coffee, espresso, and packaged supermarket coffee could welcome cheaper imports. Robusta prices have soared recently, driven by drought in major growing regions. Prices slumped last week though, after Vietnam’s weather office lowered the likelihood of heavy rains from Tropical Storm Fengshen in Vietnam’s Central Highlands, the country’s main coffee-producing region, reducing the risk of crop damage.

If tariffs fall as well, Vietnam’s plentiful supply could potentially ease cost pressure for mass-market brands. Christopher remains sceptical, though.

“It’s fascinating – Vietnam produces primarily robustas, which, like Brazilian naturals, aren’t tenderable against ICE contracts and so doesn’t really contribute to ‘supply’ in the way we talk about it when we reference the C-market,” he says. “I don’t believe there are that many roasters subbing between Robusta and mild Arabicas in any serious volume.”

When politics meet higher prices

Recent consumer-price data in the US show brewed-coffee costs rising faster than the broader food index, alongside spikes in bananas and beef. Analysts at Bloomberg note that tariffs and climate shocks are combining to push prices up across the value chain.

The International Coffee Organization suggested in July that global coffee supply could improve in as long as three years, as new plantations spurred by record high prices start producing – warning that the outlook, however, depends on market conditions remaining favourable enough for farmers to maintain their crops.

It is therefore unsurprising that America’s levies on coffee have met resistance. A bipartisan US Senate vote recently rejected a White House proposal to impose tariffs on Brazilian coffee – a move seen as unnecessary self-harm, given Brazil’s dominance in supply. Futures markets rallied on even the hint of restrictions; traders know that tampering with Brazil all but guarantees a price squeeze.

Consumers are already feeling the impact, with coffee quickly becoming less affordable to many. Roasters face a dilemma: hedge aggressively and hope trade disputes settle, or pass on costs and risk demand destruction. Some are experimenting with more robusta in blends, a strategy that could accelerate structural change in taste preferences.

For now, the policy picture remains muddled. Decisions in Washington align with domestic politics, but lawmakers seem unwilling to allow tariffs to fully flow through to household budgets. This ambiguity creates volatility and uncertainty.

“I don’t think this marks a dramatic shift – more a reminder of how sensitive Americans have always been to coffee prices,” says Christopher. “History doesn’t repeat itself, but it certainly rhymes. When coffee costs rise, consumers and politicians react fast.”

“It happened in the early 1900s, again in the 1940s, and repeatedly throughout the 20th century: congressional investigations, price controls, even international pressure campaigns – all to keep coffee affordable. Cheap coffee has long been treated as an ‘American birthright,’ as written by Mark Pendergrast in Uncommon Grounds talking about the price increases in December 1911 during Brazil’s valorisation scheme. So whenever trade policy threatens to make the morning cup more expensive, politics tends to intervene.”

In the coming year, the industry will watch these signals: whether US-Brazil and US-Colombia tensions cool, what form tariffs on Nicaragua ultimately take, and how swiftly Vietnamese beans reclaim market share. Any one of these could shift prices, investment and consumer habits. Together, they could transform the global coffee map.