A Latte Trouble: how new tariffs impact your morning coffee price
Trump’s new tariffs are about to make your cup of Arabica/Robusta coffee a whole lot more complicated - and more expensive if you live in the U.S. I explore some data and make predictions.
Let’s start with clarifying an important difference in coffee (for those of you who are not coffee nerds!). You have Arabica and Robusta coffee.
Arabica coffee is smoother, sweeter, with notes of fruit, sugar, and higher acidity with lower caffeine. It grows at higher altitudes (600-2000m), needs cooler climates and more care despite making up ~60–70% of global coffee production. Robusta coffee is stronger, more bitter and earthy with higher caffeine and grows at lower altitudes (sea level to ~800m). It is often used in instant coffee and your supermarket blend - making up about ~30–40% of the market share.
This difference in how easy it is to produce is reflected in the coffee prices too: Arabica is generally more expensive due to harder cultivation and being less resistant to pests and disease. The price differential increases even more with weather shocks and other events. This is seen below in the 1995, 2010, 2021 and 2024.
Trump and tariffs
Certainly not unnoticed, on April 2, 2025, President Donald Trump announced a series of sweeping tariffs under the banner of "Liberation Day," aiming to overhaul U.S. trade policies and promote domestic manufacturing. These measures include a universal 10% tariff on all imports, with additional, higher tariffs targeting specific countries based on perceived trade imbalances and practices.
Many coffee-producing countries are subject to the new duties. For example, Vietnam, a major exporter of Robusta coffee, faces a total tariff of 56% (10% universal + 46% country-specific). Other coffee-producing nations, such as Colombia and Brazil, are also impacted by the universal 10% tariff.
U.S. coffee roasters, already contending with high coffee prices due to supply chain challenges and climate-related production issues (see my graph!), now face additional cost pressures from these tariffs.
Based on this, what are my expectations?
1. Vietnam (High Tariff, High Robusta, High Imports)
46% tariff and 97% Robusta production.
U.S. imports are significant (~$450M).
Impact: Robusta prices in the U.S. are likely to rise substantially, especially in instant coffee and espresso blends, where Robusta is commonly used.
2. Brazil & Colombia (Major Arabica Suppliers, Low Tariffs)
Brazil: 64% Arabica, 10% tariff, $1.5B in U.S. imports.
Colombia: 99% Arabica, 10% tariff, $1.55B imports.
Impact: While tariffs apply, they’re mild. These two dominate Arabica supply to the U.S., so Arabica prices may rise modestly, mostly due to general cost pass-through rather than supply loss.
3. Indonesia, India, Mexico (Higher Tariffs + Notable Importers)
Indonesia: 87% Robusta, 32% tariff.
India: 70% Robusta, 26% tariff.
Mexico: 15% Robusta, 25% tariff, large Arabica exporter too.
Impact: Pressure on both Robusta and Arabica mid-tier supply lines, possibly reducing variety/volume or shifting sourcing to lower-tariff countries.
4. Ethiopia, Honduras, Peru, Guatemala (Mostly Arabica, Low Tariffs)
Mostly 10% tariffs, primarily Arabica producers.
Smaller volume individually, but collectively help stabilize Arabica supply.
Impact: Less price pressure here — these origins may become more attractive to U.S. importers shifting from high-tariff countries.
Let me summarise this:
I, therefore, predict this to be bad news for coffee addicts living in the US. Nevertheless, while U.S. roasters scramble to absorb or pass on rising costs, European buyers might gain a short-term advantage(!). With U.S. demand potentially cooling for high-tariff Robusta origins like Vietnam and Indonesia, Europe could face less competition for supply - potentially stabilising prices, or even bringing slight relief in wholesale markets.
But don’t celebrate too fast. Global supply constraints, climate shocks, and rising demand in Asia will continue to put pressure on prices across the board. So while Europe might dodge the worst of Trump’s “Liberation Day” tariffs, your European cappuccino won’t be immune forever.