Meanwhile, U.S. coffee prices have skyrocketed by about a third. This spike is largely attributed to tariffs and production struggles stemming from weather events disrupting global coffee crop yields. Coffee prices have spiked in recent months, reaching an average price of $9.14 per pound of ground coffee as of September 2024. That’s a 3% increase from the $8.87 average in August. That’s down from July, but this increase still marks a mind-boggling 41% jump from the same month last year. The ongoing crisis has completely upended the supply chain for consumers and businesses of all kinds.
Brazil is the United States’ number one provider of coffee, representing 30% of U.S. imports. In recent years, Brazilian producers have started, for the first time in history, to withhold shipments to negotiate with American roasters the division of tariffs-related burdens. To begin with, Brazil is the undisputed leader of the U.S. coffee supply chain. At the same time, Vietnam and Colombia make up 8% and 20% of the market, respectively. Vietnam has been under a 20% tariff since this past summer and Colombia falls under a 10% tariff.
The combination of high tariffs and record-breaking weather conditions has made the problem much worse. According to the Food and Agriculture Organization of the United Nations, world coffee prices skyrocketed 71 percent. In 2024, it’s taking rents down about 22 percent calculate the normalized difference. In recent years, climate-related shocks have caused coffee production to fall from 8 to 12 percent each year. Consequently, the world is hit with an acute crisis of supply shortages.
Nikki Bravo, co-owner of Momentum Coffee in Chicago, recently raised her prices by about 15% for lattes, cappuccinos, and various other drinks. It’s an uphill battle right now,” she said, pointing out that her prices for coffee beans have gone up 15% from this time last year.
“At some point we just had to pass it along, we couldn’t continue to eat it,” – Nikki Bravo
The cost of tariffs on America’s coffee market has put a buzz in the ears of many policymakers. In particular, U.S. Representative Ro Khanna pointed out the failure of such blanket tariffs to solve the problem in this instance.
“We only produce 1% of the coffee that Americans consume. It’s one of the best examples of Trump’s blanket tariffs making no economic sense,” – U.S. Rep. Ro Khanna
The consumer price index for coffee products is up nearly 14 percent. U.S. coffee prices are up 19% from last September 2022. This inflation in pricing is indicative of a larger trend impacting coffee and other agricultural commodities worldwide.
Even with these challenges, the U.S. still imports the vast majority of coffee consumed. According to the National Coffee Association, domestic coffee production only meets about 1% of what Americans consume. This circumstance underscores how susceptible the market is to outside forces.
Since the beginning of this year, coffee prices have been on an upward trajectory. This increase has initiated a wave of similar changes across coffee shops and restaurants all around the country. That means business owners are under increasing pressure to raise their own prices and offset costs, all while keeping consumers’ products affordable.
