New U.S. Tariffs on Green Coffee: Impact on Roasters and Farmers

In an article published by Alejandro Cadena, co-founder and CEO of Caravela Coffee, he discussed the impact of the new U.S. tariffs on green coffee imports, which were imposed on April 2, 2025. Despite strong lobbying from key industry players, including Cadena, green coffee was not granted an exemption from these tariffs. As a result, roasters, farmers, and traders are bracing for the impact these new import duties will have on both forward and spot coffee prices, especially for shipments that have not yet been dispatched, whether contracted or not.

This move is expected to drive up the cost of green coffee in the U.S., disrupting existing supply chains and potentially altering sourcing strategies across the industry. While the decision has left many in the coffee community scrambling for answers, it also presents a pivotal moment for businesses to re-evaluate their operations and contracts in light of the new reality.

Key Details About the Tariffs:

• Effective Date:

  • Tariffs will apply to goods loaded onto vessels after 12:01 a.m. EDT on April 5, 2025.

  • For Nicaraguan coffee, the 18% tariff will take effect for goods loaded after 12:01 a.m. EDT on April 9, 2025.

• Exemptions:

  • Coffee already shipped before the above dates.

  • Coffee currently in U.S. warehouses.

  • Mexican coffee that complies with USMCA (United States-Mexico-Canada Agreement) provisions. It is worth noting that all Caravela’s Mexican coffee complies with this agreement.

• How Tariffs Are Calculated:

  • Tariffs are calculated based on the CIF (Cost, Insurance, and Freight) value.

  • For example, coffee with a CIF value of $5.00/lb will incur a $0.50/lb duty at a 10% tariff rate.

• How It Will Appear on Invoices:

  • In the spirit of transparency, tariffs will appear as a separate line item labeled “Duty” on invoices for any forward-contracted coffee shipped after the effective date.

Impact on Producers and the Global Supply Chain:

• Most Latin American and African coffee will be subject to 10% duties, creating a relatively level playing field.

• Mexican coffee, which qualifies for exemption under the USMCA, will become a more attractive option for U.S. roasters.

• Nicaraguan coffee will be the most affected, as it will face the highest tariff of 18%, leading U.S. roasters to seek alternatives from countries with lower tariffs.

• Vietnam and Indonesia, major producers of Robusta and Arabica, will face higher tariffs (46% and 32%, respectively), pushing roasters to reconsider their sourcing strategies, with potentially increased demand for Arabica, especially from Brazil.

• This change in tariff rates may lead to shifts in blend compositions, price differentials, and create winners and losers based on tariff exposure.

What to Expect in the Short and Long Term:

• Short Term:

  • Increased demand for ICE (Intercontinental Exchange) certified and non-ICE-certified spot coffee currently in U.S. warehouses.

  • Likely price increases on spot coffee, with reduced availability.

• Long Term:

  • Higher roasted coffee prices in the U.S. market, as tariffs will impact all roasters.

  • Relatively minor pressure on demand (less than 3%) due to coffee’s inelastic nature.

  • With roasted coffee in Europe also subject to tariffs, U.S.-based roasters may find new business opportunities.

Market Outlook and Opportunities for Roasters:

On April 4, 2025, futures prices dropped to a two-month low. Further downward pressure is expected as Brazilian farmers take advantage of a weak Real to sell. This presents an opportunity for roasters to lock in forward contracts at more favorable levels before further market volatility sets in.

Caravela Coffee remains committed to helping its partners navigate these changes. While the tariffs cannot be avoided, Caravela focuses on providing support and transparency to help roasters and producers adjust their sourcing strategies strategically and sustainably.

Our Commitment to You:

“We understand that these changes bring additional complexity and cost, especially for small and medium-sized roasters already grappling with historically high green coffee prices. While we cannot eliminate the tariffs, we will continue to offer strategic solutions to help you adjust your sourcing plans effectively.”