Coffee Prices Rising in the US Explained

Morning Jolt: Why Your Coffee Is About to Cost More Across America 

America's cherished coffee ritual faces a significant price shock. New import tariffs imposed on coffee beans threaten higher Coffee Prices and costs for consumers nationwide. Cafes and bakeries are already feeling the pressure, potentially leading to shorter queues as people reassess their daily spending. While coffee represents a major consumer market and contributes significantly to the US economy – over $343 billion (£270 billion) annually – this reliance on imports makes the sector highly sensitive to trade policy shifts. The financial burden of these tariffs ultimately trickles down to the coffee drinker.

Policy Shift Creates Market Anxiety 

The situation escalated following the Trump administration's announcement on 2 April 2025, outlining plans for universal tariffs on imported goods. This policy, aimed at boosting domestic manufacturing, included potential levies from 10% to over 100% on goods from key coffee-producing nations. While a 90-day pause implemented on 9 April temporarily capped tariffs at 10% for most countries, this measure still introduces significant strain. China faces a much steeper 125% rate, impacting non-coffee supplies like cups and packaging crucial for cafe operations. The coffee industry watched these developments with considerable apprehension. 

Heavy Reliance on Foreign Beans 

The US coffee market's vulnerability stems from its near-total dependence on imported beans. Domestic coffee production is minimal, confined mainly to Hawaii and Puerto Rico, with negligible amounts from California. Suitable climates for large-scale coffee farming do not exist in the continental US. Therefore, unlike tariffs on goods with domestic alternatives, levies on coffee directly translate into increased costs for importers, roasters, and retailers. This fundamental reliance means the tariffs function primarily as a cost increase passed through the supply chain without stimulating significant domestic agricultural activity. 

Industry Voices Concerns 

Recognising this unique situation, the National Coffee Association (NCA) actively lobbied for an exemption prior to the tariffs' enactment. The NCA emphasised coffee's essential role in American life and the lack of domestic substitutes. They warned that tariffs would inevitably raise prices for consumers already navigating a challenging cost-of-living crisis, functioning like a regressive tax. The industry group highlighted that these tariffs arrive when businesses are already struggling with high green coffee prices driven by factors like climate change and global supply chain issues, adding further uncertainty. 

Compounding Existing Market Pressures 

The new tariffs land on a market already stressed by external factors. Green coffee bean prices were elevated before the trade policy changes. Climate change impacts, including droughts and frosts in major producing regions like Brazil and Vietnam, have significantly reduced crop yields and increased price volatility. Persistent global shipping disruptions, higher freight costs, and port congestion have also added considerable expense to importing beans. The tariffs now impose an additional layer of cost and uncertainty onto this already complex and challenging global market environment for coffee businesses. 

Estimating the Broader Consumer Impact 

Beyond coffee, the overall suite of tariffs could have a wider economic impact. Economic analyses, like those from the Tax Foundation, estimate that these broad tariffs might cost the average American household significantly more per year across all goods – potentially an extra $2,100 (£1,650). While coffee is just one part of household budgets, the tariff contributes to the cumulative pressure of rising prices on consumers. This broader economic context makes increases for everyday items like coffee feel particularly acute, potentially influencing purchasing decisions more strongly than during stable economic times. 

Immediate Business Reactions 

The financial consequences of the tariffs were felt almost immediately by businesses. Reports surfaced quickly of suppliers increasing prices following the 5 April implementation date. Jorge Prudencio, owner of Washington DC's Bread Bite Bakery, confirmed his Colombian coffee supplier raised prices promptly. Prudencio also received warnings of a second impending price increase on his next order. This rapid pass-through effect demonstrates the direct link between the import tariff and the operational costs faced by businesses purchasing green or roasted coffee beans for resale or preparation. 

The Necessity of Price Increases 

Faced with these sudden cost hikes for their essential raw materials, businesses like Bread Bite Bakery find themselves with limited options. Prudencio stated clearly that raising consumer prices is a necessary step simply to remain financially solvent. His situation mirrors that of countless cafes and roasters across the nation who must pass on these tariff-related costs to cover expenses and maintain viability. This difficult decision carries the inherent risk of alienating price-sensitive customers but is often unavoidable for survival, especially for small independent operators. 

Global Importer Status Heightens Exposure 

The United States' position as the world's second-largest coffee importer (after the EU) makes it particularly susceptible to cost increases tied to import policies. Substantial volumes of coffee arrive from Colombia and Brazil, both now subject to the 10% tariff. Other vital suppliers for the speciality market, such as Guatemala and Ethiopia, face the same duties. The tariffs' broad application across major origins means a wide spectrum of the coffee market, from commercial blends to high-end single origins, is directly affected by the added costs imposed at the border. 

Tariff Application Nuances 

Importers must also navigate the specific rules governing tariff implementation. Duties are levied based on when goods physically enter US customs, not when they were ordered. This requires careful management of inventory and contracts. A small concession exempts goods already in transit before 5 April, provided they arrive by 27 May 2025. While helpful for shipments already on the water, this detail adds administrative complexity for importers managing the transition and ensuring compliance with the new regulations, further complicating their operations. 

Inflation Already a Factor 

The tariffs compound existing inflationary pressures that businesses were already battling. At Au Lait cafe in Washington DC, manager Kamal Mortada highlighted that rising costs were a significant concern well before the tariffs. High inflation over recent years had already squeezed profit margins. Market data confirms this, showing record costs for products like pre-ground coffee in March 2025, substantially higher than previous periods and vastly inflated compared to early 2020 prices. The tariffs, therefore, add fuel to an already burning fire of rising operational expenses. 

Consumers Adjust Spending Habits 

Rising prices are inevitably influencing how consumers spend their money on coffee. Kamal Mortada observed fewer customers at Au Lait and noted distinct shifts in ordering patterns. Patrons increasingly select basic black coffee over more complex, and therefore more expensive, speciality drinks containing milk and syrups. This suggests a conscious effort to control spending. Some customers also opt for smaller serving sizes, directly responding to menu price increases that, in some cases, approached 25% for certain items. These are clear indicators of increased price sensitivity. 

Personal Habits Change Too 

The impact extends to personal choices as well. Mortada shared that the rising cost of coffee led to changes in personal habits, substituting home-brewed coffee for regular visits to major chains like Starbucks. Experiencing price jumps of at least 50 cents per cup created anxiety about potential future increases. This personal anecdote reflects a broader potential trend: if cafe prices continue their steep climb, more consumers might shift their daily consumption towards home brewing, reserving cafe visits for less frequent occasions, impacting cafe footfall. 

Global Price Surges Add Context 

These local observations align with broader trends in the global coffee market. International coffee prices, particularly for Arabica futures, hit record highs earlier in 2025. Adverse weather, especially drought in Brazil, significantly cut crop forecasts, tightening supply. Unfavourable conditions also impacted production in Vietnam and Indonesia. For the first time in years, global demand threatened to outpace supply, pushing baseline green coffee costs substantially higher for everyone, from large corporations to small independent shops, contributing significantly to the pressure felt before tariffs. 

West Coast Cafes Face Similar Issues 

The tariff impact is geographically widespread. In San Francisco, Telescope Coffee proprietor Jenny Ngo anticipates price hikes from suppliers of beans sourced from Guatemala and Ethiopia, both origins now facing the 10% tariff. Ngo has already witnessed sudden price increases for non-coffee supplies, like iced beverage cups sourced via China, which faces the much higher 125% tariff. These combined cost pressures mean Ngo confirms Telescope Coffee expects to raise its own prices again simply to maintain operations, reflecting the difficult reality for cafes nationwide. 

Optimism Tempered by Reality 

Despite these significant financial pressures, some business owners, like Jorge Prudencio at Bread Bite Bakery, hold onto a degree of optimism. Prudencio believes many consumers view coffee as an essential daily necessity rather than a discretionary luxury. This perception, he hopes, will ensure sales remain relatively strong even with higher prices. While coffee demand is less elastic than some goods, this resilience has limits, especially when combined with broader economic pressures and significant price jumps. Sustained high costs could still lead to reduced consumption frequency. 

Volatility Beyond Coffee Beans 

The challenge of rising coffee costs exists alongside broader operational volatility. Prudencio noted his bakery also faced extreme fluctuations in egg prices shortly after opening, with costs per case more than doubling rapidly. This exemplifies the wider inflationary environment affecting multiple input costs for businesses, not just those directly targeted by new tariffs. Prudencio observed a shared sense of hardship among fellow small business owners across different sectors, all navigating a complex landscape of rising expenses and economic uncertainty. 

Politics and Price Points 

Fluctuating prices for staple goods often become subjects of political debate. Figures like egg prices can symbolize national economic health. Political leaders may reference such costs to assign blame for inflation or promise future relief. President Donald Trump, for example, has linked past high costs to previous policies and pledged reductions. Regardless of political rhetoric, consumer price indices reflect the real challenges businesses and households face with rising costs for essential goods, making tariffs on widely consumed items like coffee particularly sensitive. 

Roasters Confront New Complexities 

For coffee roasters operating further up the supply chain, the tariffs add another layer of difficulty. Joel Finkelstein, manager at Qualia Roasters, which distributes green beans and sells roasted coffee, described the tariffs as compounding existing market volatility. Roasters were already managing fluctuating commodity prices and supply chain disruptions. Finkelstein also noted that previous reductions in foreign aid funding, specifically impacting USAID agricultural support programs for coffee growers in regions like Latin America, had already contributed to upward pressure on bean costs before the tariffs. 

Impact on Sales Projections 

Now facing the direct 10% tariff cost on imported green beans, Finkelstein anticipates further increases in expenditures for Qualia Roasters. This makes forecasting future sales more challenging. There is a clear expectation that higher prices resulting from the tariff might deter some buyers, particularly smaller cafes or home roasters operating on very tight budgets. This highlights the difficult choice roasters face between absorbing costs, which impacts profitability, or passing them on, which risks reducing sales volume in a competitive market. 

Vulnerabilities Along the Supply Chain 

The coffee bean's journey from farm to cup involves many stages, each susceptible to cost increases. Farmers face climate change and rising production costs. Exporters and importers deal with shipping issues and now tariffs. Roasters manage bean price volatility plus operational costs. Cafes absorb all upstream increases plus their own expenses (milk, rent, labour). The new tariffs add pressure at the import stage, inevitably affecting costs down the line. While large corporations have mitigation tools like hedging, smaller independent businesses lack these resources. 

The Uncertainty of the 90-Day Pause 

The temporary 90-day pause, freezing tariffs at 10% for most countries, offers limited breathing room but creates significant planning uncertainty. Businesses struggle to make long-term purchasing or pricing decisions without knowing if rates will revert to higher levels, remain at 10%, or change again after the pause expires. This lack of clarity hampers investment and strategic planning. The National Coffee Association continues advocating for a full exemption, arguing the tariffs harm US businesses and consumers without benefiting domestic producers. The coming months are crucial. 

Climate Change: An Underlying Threat 

The tariff issue unfolds against the persistent backdrop of climate change significantly impacting coffee production globally. Major producers like Brazil and Vietnam have suffered reduced yields due to droughts and unusual weather patterns. These events contribute substantially to the volatility and upward trend in green coffee prices, independent of trade policies. Logistical challenges, including high freight costs and port congestion stemming from the pandemic era, also continue to add expense and uncertainty to importing beans, affecting landed costs even before tariffs. 

Diverse Impacts: Large vs. Small 

The tariff's impact varies across the industry. Large chains often use long-term contracts and hedging to mitigate immediate effects and may absorb some costs initially. Independent shops and smaller roasters have less financial cushion and purchasing power, making them more exposed to spot market swings and supplier increases. The tariff adds a direct, unavoidable cost to their primary raw material, forcing difficult decisions about passing costs to consumers sensitive to inflation or absorbing them at the risk of profitability. 

Consumer Adjustments May Deepen 

Consumers bear the final cost. While coffee is often seen as essential, persistent price hikes test loyalty. The observed shifts to basic coffee, smaller sizes, or reduced visit frequency could become more pronounced. Increased price sensitivity, driven by broader inflation, means coffee competes with rising costs for fuel, groceries, and housing. This might accelerate the trend towards at-home brewing, potentially benefiting retail bean sales but possibly reducing overall cafe footfall if prices remain high over the long term. 

An Unpredictable Market Future 

The market outlook remains clouded. Global green coffee price trajectories depend on future harvests and weather. US trade policy after the 90-day pause is unclear. Will the 10% tariff become permanent, rise, or be removed? This ambiguity hinders business planning. Industry bodies continue lobbying efforts, arguing tariffs harm US businesses and consumers disproportionately. Adapting to volatility while managing costs and maintaining quality is the key challenge facing the US coffee sector in this uncertain period. 

Economic Headwinds and Policy Choices 

The coffee price pressure occurs amid wider economic challenges, notably persistent inflation squeezing household budgets. Tariffs contribute to this pressure by increasing import costs. While aimed at protecting domestic industry, tariffs on goods like coffee with minimal US production primarily raise costs for consumers and downstream businesses. The 90-day pause adds complexity, creating uncertainty that inhibits long-term planning for importers and roasters unsure of future rates. Industry groups continue to argue against the tariffs, citing harm to the extensive domestic value chain reliant on imported beans. 

Potential Effects Back at Origin 

While tariffs are applied domestically, market instability can indirectly affect global coffee producers. Reduced US demand or a shift towards cheaper beans due to price sensitivity can eventually lower prices paid to farmers, particularly vulnerable smallholders already facing climate change and rising costs. Reduced demand for speciality coffee might also disincentivise quality improvements. Furthermore, cuts to development aid supporting farmers exacerbate these challenges. Trade barriers combined with reduced support create a difficult environment for coffee-growing communities reliant on stable export markets. 

Navigating Forward 

The US coffee industry confronts a convergence of challenges: pre-existing pressures from climate and logistics, now compounded by tariffs. Businesses must adapt, passing on costs while risking customer pushback in an inflationary climate. Consumers face higher prices, prompting adjustments in buying habits. The future remains uncertain, dependent on trade policy decisions, global commodity markets, and consumer resilience. Agility, strategic planning, and advocacy will be crucial as the sector navigates this period of adjustment, hoping for greater stability while adapting to ongoing volatility.