Coffee lovers in the United States are bracing for a jolt, and it’s not just from caffeine. The price of a cup of coffee is likely to climb even higher due to new tariffs imposed by President Donald Trump on Vietnam, a major supplier of coffee to the US. These tariffs, some of the steepest among those placed on US trading partners, are shaking up the coffee market at a time when prices are already high due to poor harvests and supply chain challenges. For Americans who rely on their daily brew, this could mean digging deeper into their wallets for everything from instant coffee to espresso drinks.
Vietnam’s Role in the US Coffee Market
Vietnam is a powerhouse in the global coffee industry, particularly when it comes to robusta beans. These beans are the backbone of instant coffee and espresso, staples in many American households and coffee shops. As the world’s leading producer of robusta, Vietnam plays a critical role in keeping US coffee shelves stocked. It’s the third-largest coffee supplier to the US, trailing only behind countries like Brazil and Colombia.
The new 46% tariff on Vietnamese goods is a significant blow to this supply chain. For comparison, Brazil, the top producer of arabica beans (used in higher-end coffee shop drinks), faces a much lower 10% tariff. The stark difference in tariff rates is already prompting some US buyers to rethink their sourcing strategies, but replacing Vietnam’s high volume and consistent quality is no easy task.
Why Coffee Prices Are Already High
Even before the tariffs, coffee prices were on a steep upward trajectory. Weather problems in key coffee-growing regions have led to smaller harvests, tightening global supplies. Arabica beans, favored by specialty coffee shops, have seen futures prices in New York hover near record highs. Meanwhile, robusta futures in London have surged by more than 40% over the past year due to similar supply issues.
These price spikes are largely due to adverse weather in countries like Brazil and Vietnam. Droughts, floods, and other climate-related challenges have reduced crop yields, leaving less coffee to go around. With global demand for coffee remaining strong, the result has been a steady climb in costs for both producers and consumers.
How Tariffs Are Making Things Worse
The 46% tariff on Vietnamese coffee is one of the highest rates in Trump’s latest round of trade measures. Industry experts warn that this will likely lead to more volatility in the coffee market. Priyanka Sachdeva, a senior market analyst at Phillip Nova Pte. in Singapore, explained that the tariffs could worsen the existing shortage of robusta beans in the US. “US coffee prices could rise, especially for robusta-based products,” she noted.
For US importers, the tariffs create a tough situation. Coffee stocks in the country are already low, and there’s little room to absorb further disruptions. Daryl Kryst, vice president of Soft and Agricultural Commodities Asia for StoneX Group Inc., pointed out that US coffee inventories are unlikely to recover quickly with the tariffs in place. This means that any hiccups in supply could lead to noticeable shortages, particularly for instant coffee and espresso products that rely heavily on robusta.
Nguyen Nam Hai, chairman of the Vietnam Coffee and Cocoa Association, expressed shock at the high tariff rate. “Everyone is worried, especially about the signed export contracts,” he said. Many Vietnamese exporters are now scrambling to figure out how to fulfill existing agreements while facing these new costs. While Vietnam also ships large amounts of coffee to the European Union, which could help soften the blow, the US market is a significant one, and the tariffs will undoubtedly have a ripple effect.
Can the US Switch to Other Suppliers?
With Vietnam’s coffee now much more expensive, some US buyers are looking at other countries to fill the gap. Brazil, Indonesia, and Ivory Coast are potential alternatives, but each comes with its own challenges. Brazil, for instance, produces a type of robusta-like coffee called Conilon, and its lower 10% tariff makes it a more attractive option. Steve Wateridge, head of research at TRS by Expana, suggested that the tariff difference could push US buyers to favor Brazilian coffee or even arabica over Vietnamese robusta.
However, these alternatives have limitations. Indonesia and Ivory Coast also face steep tariffs, which reduces their appeal. Additionally, none of these countries can match Vietnam’s ability to deliver large quantities of high-quality robusta consistently. Switching to arabica isn’t a perfect solution either, as robusta’s unique flavor and texture are essential for instant coffee and espresso. Sachdeva emphasized that the tariffs will make it “even harder for US buyers to secure affordable robusta, leading to potential shortages.”
The Bigger Picture: Other Commodities Affected
Coffee isn’t the only commodity feeling the heat from these tariffs. Other soft commodities, like cotton and orange juice, have seen price drops due to fears of weaker demand. Cotton futures, for example, fell as much as 4.4%, hitting their exchange limit. Orange juice prices dropped by 6% in a single day. Meanwhile, cocoa prices in New York bucked the trend, climbing 5.8% after the US imposed tariffs on Ivory Coast, a top cocoa producer.
These price swings highlight the broader impact of the tariffs on global trade. For consumers, the effects are likely to be felt beyond just coffee. From higher grocery bills to pricier cafe drinks, the cost of everyday goods could creep up as supply chains adjust to the new trade landscape.
What This Means for Coffee Drinkers
For the average American coffee drinker, the combination of tariffs and existing supply issues spells one thing: higher prices. Whether you’re brewing instant coffee at home or grabbing an espresso on the go, the cost of your daily fix is likely to rise. Coffee shops may pass on these higher costs to customers, and grocery store brands could follow suit.
The tariffs are also likely to create more uncertainty in the market. On a recent trading day, robusta futures fell by as much as 2.5%, and arabica futures dropped 3.1%, though both recovered most of their losses by the end of the session. These fluctuations reflect the market’s unease as it grapples with the new tariffs and their potential to disrupt supply chains.
Looking Ahead
As the US coffee industry navigates this challenging period, all eyes will be on how importers adapt to the tariffs. Some may try to stock up on Brazilian or other coffees, while others may have to pass on higher costs to consumers. For now, Vietnam remains a critical part of the US coffee supply chain, and the 46% tariff is a hurdle that won’t be easy to overcome.
Coffee drinkers may want to brace themselves for a pricier cup in the months ahead. While the industry works to find solutions, the combination of tariffs, supply shortages, and weather challenges means that the cost of coffee is likely to keep climbing. For now, savoring that morning brew might come with a slightly bitter aftertaste—at least for your wallet.
