Tariffs Threaten Coffee Supply in North America
Coffee industry leaders across North America are grappling with potential trade disruptions as uncertainty looms over tariffs on coffee imports, particularly from South America. The escalating trade tensions initiated by former U.S. President Donald Trump’s administration have raised concerns about the impact on roasting, packaging, and trading operations spanning the United States, Canada, and Mexico.
Major coffee companies strategically operate facilities across borders to streamline supply chains and optimize production. However, potential U.S. tariffs—and any retaliatory measures from trade partners—could force businesses to rethink their operations.
Mexico, a key supplier of high-quality green coffee to the U.S. and Canada, also exports significant quantities of instant coffee. The CEO of one of the region’s largest coffee companies, who requested anonymity due to the sensitivity of the issue, emphasized the deep integration between U.S. and Canadian coffee operations.
“Many roasting and retail supply operations function across the U.S.-Canada border. Any shifts in the political or tariff landscape will require strategic adjustments,” the executive stated.
Starbucks (SBUX.O), for example, roasts coffee for its Canadian stores in the United States. Addressing potential trade disruptions, Starbucks Chief Executive Brian Niccol told shareholders, “As the political environment and tariff structures evolve, we will adapt to navigate the regulatory conditions effectively.”
Although the U.S. has postponed 25% tariffs on most goods from Canada and Mexico, coffee appears to be largely excluded from the U.S.-Mexico-Canada Agreement (USMCA). Some coffee traders are already incorporating tariff clauses into contracts to mitigate risk.
“We’ve added a clause requiring buyers to cover an additional 25% tariff if it applies. Most traders are following suit,” said Jeff Bernstein, managing director of Quebec-based coffee trading firm RGC.
Bernstein noted that one client in Oakland, California, recently accepted these terms for a coffee shipment from Mexico.
Industry leaders fear that U.S. tariffs could soon extend to South American coffee imports, with Brazil— the world’s largest coffee producer—potentially in the spotlight.
“Trump mentioned Brazil in one of his tariff speeches, albeit briefly. It’s definitely on the radar,” said Andre Acosta, director of Commodity Solutions Latam at brokerage firm Marex.
Brazilian Vice President Geraldo Alckmin recently met with U.S. Secretary of Commerce Howard Lutnick to discuss trade policies, signaling early-stage consultations on potential tariffs.
Bill Murray, president of the U.S. National Coffee Association, is calling for coffee to be exempt from additional tariffs, warning of widespread economic consequences.
“Tariffs on coffee would impact three in four Americans. Many believe exports benefit the U.S. economy, but the reality is that we cannot grow coffee domestically,” Murray stated.
Meanwhile, global coffee giant Nestlé (NESN.S) has been heavily investing in Mexico’s instant coffee sector, working with thousands of farmers to boost robusta coffee production. The company declined to comment on the potential impact of tariffs.
As trade tensions persist, the coffee industry remains on edge, bracing for possible policy shifts that could reshape North America’s coffee supply chain and pricing structures.
