Are coffee prices going up because of Trump?

Direct Answer: Your local coffee costs have soared in recent months thanks to climate change, not politics — though Donald Trump’s trade threats are juicing what some call the “fear premium.” As of the end of 2024, historic droughts in Brazil and typhoons in Vietnam have ravaged global supply, sending costs for raw coffee soaring to near-record levels. But the market is already ‘pricing in’ Trump’s all-imports tax ie -universal tariff- (10-20%). And if it were adopted, this policy would have the effect of a direct tax on coffee — which would almost certainly be passed on to you. So, yes, the supply chain got broken by weather — but political speculation is preventing it from resolving back to a normal price.

For the Daily Penny-Pincher

The Reality Check: You’re probably blaming the President for something that is actually a farming crisis but be prepared for political policies to make it all worse next year.

The Counter-Intuitive Truth:

The price increase you’re seeing in the grocery aisle isn’t so much about the beans, it’s about the “Robusta Switch.” High-end Arabica beans (from Brazil) are too expensive, thanks to drought; so big commercial brands are covertly adding lots more Robusta beans (which have a harsher taste, and lower price tag, from Vietnam). But Vietnam just experienced its leanest crop in years. As the “cheap filler” gets more expensive, a floor price is established for all coffee. You are not only paying for inflation, but also for the “budget bean,” which has collapsed.

Actionable Solution: The “Cost-Per-Cup” Audit

• Halt your “Grocery Store Premium” purchases: Mid-tier grocery store brands (Folgers/Dunkin) are most susceptible to the “Robusta Switch” and tariff hype. Their margins are small, so they pass costs along to you quickly.
• Buy Your Beans Whole in Bulk: Local roasters often have contracts set months in advance. They sell for less than on the world market. Purchasing a 5lb bag now is the equivalent of locking in your price for 2-3 months.
• Read the Label: If a bag doesn’t say “100% Arabica,” you are going to pay a big premium for filler.

The “Latte Factor” Logic:

They have been telling us that Trump’s tariffs, if they arrive, will come in the form of imports. Milk, sugar and paper cups are household. The cost of a latte could go up 20 cents, but the price of a bag of beans might increase by $3.00. The mathematically smarter hedge against tariffs becomes buying beans.

For Cafe/Roastery Owners By Roasters

The Reality Check: Your real enemy is not the current price of green coffee, but rather the logistical gridlock that precedes an incoming administration.

The Counter-Intuitive Truth:

Tariffs rarely hit overnight. The real danger is “Front-Loading.” Because importers fear high tariffs (as they should), and when a candidate threatens them as Trump did with the 10-20% universal baseline, this is exactly what happens: panic, and massive amounts of inventory trying to be rushed into/out of the U.S. before inauguration or policy will take effect. This surge jams ports, raising the price of shipping containers and warehousing fees ever higher. You could pay more for the shipping than you do for the tariff.”

Actionable Solution: The way to handle this is Inventory Buffing and Menu Engineering.

• The 90-Day Cushion: Understand your burn rate. If you can, get enough GRI coffee stock to last you through Q1 and Q2 of the post-election year. This helps you get anyway the inevitable, initial logistics chaos.
• Transparent Marketing Do Not Eat This Expense. On some level the research bears it out: People are more willing to accept price hikes if they’re given a specific reason (“Due to Brazilian drought…”) instead of a more general one (“Due to inflation” or “Since it is known in the literature that “…)).
• Diversify Origins: If Trump focuses on individual trade deficits (e.g., Vietnam or Central America), those origins are riskier. African coffees (Ethopia/Kenya) are frequently under other trade agreements (e.g. AGOA) ‍ Mixing up blendstocks lowers political risk.

Political & Economic Obsessivetypes

The Reality Check: Coffee is a great example of how “protectionist” tariffs can backfire on home-grown manufacturing.

The Counter-Intuitive Truth:

Tariffs are a tool to protect homegrown industries. But it also grows no (well, miniscule amounts in Hawaii/California) coffee. There’s no domestic industry to protect. Thus, a tax on the import of coffee is conceptually a Regressive Tax. It falls harder on the poor (who spend a greater share of their income on food). Moreover, since the US is a major processor (including roasting and packaging) of coffee itself, taxing the raw material makes coffee that’s processed in the United States less competitive internationally—which could hurt some American manufacturing jobs, which is ostensibly one thing this policy would like to save.

Actionable Solution: Watch the PPI vs. CPI Spread

• Watch the Producer Price Index (PPI): How businesses are doing. If the PPI for “Roasted Coffee” jumps, and the Consumer Price Index (CPI) doesn’t keep pace, companies are eating it.
• The Tipping Point: With the spread narrowing, businesses have already stopped absorption and are adding costs to voters. That’s an early warning sign of when “economic policy” turns into “voter discontent.”
• Do “The Breakfast Index”: Coffee is inelastic (regardless of the price, people buy it). When coffee prices skyrocket because of tariffs, people don’t stop drinking coffee; they just stop spending on discretionary items (eating out, new electronics). Rising coffee prices can actually put a chill on the broader retail economy.

For Commodity Investors (Traders)

The Reality Check: You’ve got to differentiate the “Trump Trade” (market sentiment) from the “Weather Trade” (supply fundamentals).

The Counter-Intuitive Truth:

In the past, a Trump win is strikingly Dollar positive. A strong dollar generally makes commodities (which are priced in dollars) cheaper for the United States to buy. But, Coffee is disattaching from the Dollar. The shortage of supply is that intense: not even a strong USD is enough to keep prices down. If you bet in favor of coffee prices easing back as the Dollar Index (DXY) rallies post-election, you will lose money. The premium of scarcity is now greater than the arbitrage of currency.

Actionable Solution: The Arbitrage Spread

• Long Arabica / Short Robusta: If the tariffs are equal (e.g.: 10% across everything), lower margin, cheaper goods take more of a hit. The Arabica-Robusta Spread is what to watch now, even if it isn’t in this trade just this minute. As prices of Robusta coffee hit record highs amid a supply crunch in Vietnam, the difference between the two is narrowing.
• Watch the Brazilian Real (BRL): Don’t listen to tweets; watch the currency. If Trump’s trade policies wound Brazil’s economy, the Real falters. Brazilian farmers then race to sell coffee in order to obtain USD, which leads to reduced prices. And here’s one way coffee prices might in fact go down under Trump — a paradox in which the mechanism of the tariff-as-specter and, you guessed it, the big data-scientists of efficiency play an intimate role.

Frequently Asked Questions

Are politics or climate change to blame for the latest jump in coffee prices?

It is predominantly spurred by climate change. Record droughts in Brazil and typhoons striking Vietnam have devastated global supply, as speculation over future trade tariffs is tacking on an extra “fear premium” to costs.

What would a “universal tariff” mean for the cost of my morning coffee?

Because the U.S. does not commercially grow coffee, an across-the-board tariff (projected to be 10-20%) would have effectively been a tax on the importers. This cost would almost certainly be passed on to consumers, for a larger increase in prices than inflation alone.

What is the “Robusta Switch,” and why does it matter to budget shoppers?

And to make commercial brands affordable, they might add a percentage of cheaper Robusta beans. But because Vietnam (where most Robusta flows from) had a bad crop, this “cheap filler” got expensive, lifting the floor price on even mid-level grocery store coffee.

What’s the best way for consumers to protect themselves against increasing coffee prices?

Purchase whole bean “100% Arabica” coffee from your local roaster in bulk (like 5lb bags). Local roasters’ prices often are slow to catch up with the worldwide market, meaning it’s possible for you to lock in a lower price over several months than you’ll find at grocery stores, which tend to adjust more quickly.

What should cafe owners do to brace for potential changes in trade policy?

Cafe owners ought to be wary of “front-loading” — importers’ rushing inventory into the U.S. before new laws change, leading to shipping bottlenecks. They should be working to secure a 90-day inventory buffer, enough to tide them through the initial logistics chaos of a new administration.

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