Coffee prices could see some relief after the partial U.S. tariff reversal

[roasted coffee beans on concrete background price tag]
TanyaLovus/iStock via Getty Images

Coffee prices for consumers could get some relief after the Trump administration rolled back tariffs on coffee imports as part of a broader executive order announced on November 14. The new policy specifically exempts coffee from the previously imposed reciprocal tariffs that were as high as 10% to 15%. The rollback was motivated by inflationary pressures and mounting criticism over rising grocery prices, with coffee prices up around 19% over the past year.

The National Coffee Association said the decision will ease cost-of-living pressures for the millions of Americans who drink coffee and provide greater security for U.S. companies that rely on imported beans. Trade deals with Ecuador, Guatemala, El Salvador, and Argentina were noted to have played a role in securing the tariff reduction for coffee.

Experts expect the rollback to reduce input costs for coffee roasters, retailers, and related companies, although tariffs on imports from some top sources such as Brazil, Colombia, and Vietnam remain unchanged for now. Some analysts indicate the price reduction will help but may not immediately affect retail-level prices due to factors such as hedging, supply contracts, and global market dynamics.

Coffee futures fell 5.4% on Monday after sitting near their highest levels in more than five decades earlier in the year due to continued weather disruptions, trade tariffs, and structural supply imbalances in major producing countries. Key factors in addition to tariffs tightened global coffee supply and pushed prices for arabica and robusta coffee futures up. Extreme weather in producing regions has been a major consideration. Brazil, which supplies roughly one-third of the world’s coffee, has faced severe drought and heat, cutting yields and bean sizes. Vietnam and Colombia have also struggled with erratic rainfall and dry spells.

On the tariff front, the U.S. enacted tariffs of 40% on Brazilian and 20% on Vietnamese coffee earlier this year. Those two countries account for more than half of global output, sharply reducing export flows and raising U.S. import costs broadly.

Companies potentially impacted by the level of coffee prices include Starbucks Corporation (SBUX [https://seekingalpha.com/symbol/SBUX]), Dutch Bros (BROS [https://seekingalpha.com/symbol/BROS]), First Watch Restaurant Group (FWRG [https://seekingalpha.com/symbol/FWRG]), Coffee Holding (JVA [https://seekingalpha.com/symbol/JVA]), Dunkin' Brands, J.M. Smucker (SJM [https://seekingalpha.com/symbol/SJM]), Starbucks (SBUX [https://seekingalpha.com/symbol/SBUX]), McDonald's (MCD [https://seekingalpha.com/symbol/MCD]), Costa Coffee (KO [https://seekingalpha.com/symbol/KO]), Tim Hortons (QSR [https://seekingalpha.com/symbol/QSR]), Luckin Coffee (OTCPK:LKNCY [https://seekingalpha.com/symbol/LKNCY]), Nestle (OTCPK:NSRGY [https://seekingalpha.com/symbol/NSRGY]), Keurig Dr Pepper (KDP [https://seekingalpha.com/symbol/KDP]), Kraft Heinz (KHC [https://seekingalpha.com/symbol/KHC]), and Krispy Kreme (DNUT [https://seekingalpha.com/symbol/DNUT]).

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