Navigating Tariffs

When your green coffee importer greets you with “How’s Liberation Day treating you?” you know you’re in for a rough conversation. Actually all of our import partners and direct trade partners are amazing people and it’s an honor to work with each one of them. The conversation went well, but we are dealing with a harsh new reality. The new tariffs that went into effect on April 4 will have an impact on coffee. My goal in this update is to try to explain what we know and what we don’t know. Then extrapolate out a little of the potential impacts. Unfortunately, the bottom line is that prices we pay for green coffee will continue to go up. Furthermore, this time, the price increase has nothing to do with market principles.  

Okay, first of all what do we actually know? Most coffee producing countries are falling under the 10% tariff category. Most of the origins that Tug Hill Artisan Roasters purchase coffee from such as Brazil, Honduras, Colombia and Guatemala will have a new tariff of 10%. Nicaragua has a tariff of 17%. Kenya and Rwanda are also both at 10%. At first glance this would imply that we can anticipate an increase in green coffee from around 10% - 17%. Unfortunately, it’s not this simple. 

Vietnam is the world’s second largest coffee producer and it was levied with a 46% tariff. Vietnam produces Robusta, a lower grade coffee that is often used in instant coffee and lower end commercial blends. If, however, Robusta coffee becomes too expensive, some roasters will purchase arabica varietals. This will set off a chain reaction where newly created demand for arabica coffees will translate into higher prices for higher end arabicas. We honestly cannot say what this impact will have on the whole market. Furthermore, it’s important to keep in mind that while the US is the world’s largest importer of coffee. These new tariffs do not apply to the EU purchasing coffee from Vietnam or other parts of the world, for that matter. The bottom line is that there is an awful lot up in the air right now and we just don’t know to what extent the impact of the US’ high tariff towards Vietnam’s will have. 

Finally, today, the C-Price of green coffee crashed over 4%. Yesterday July Arabica Futures were trading at around 3.82/lb. Today at the close they’re trading at $3.65. Green coffee has been extremely volatile throughout 2024-25, but a collapse of 4% almost erases half of the impact of the tariffs. I think it’s safe to say that this is reflective of the expectation of decreased demand, but it may just have to do with traders trying to put their money in more reliable investments. 

Here’s the silver lining: About a week before these tariffs went into effect, Tug Hill Artisan Roasters entered into some new contracts with its larger suppliers. We should not have to change our pricing for about 2 months (please don’t hold me to this. If we run out of one of the coffees we’ll have to purchase more and it will probably be at a higher price). The hope is that this will give time to see how the tariff policy plays out. 

Another piece of hope: A 10% increase at origin does not translate into a 10% price increase at shops. We just have a long excel sheet that we plug our purchasing price in and then it spits out a number that we have to charge per lb. Theoretically, the excel sheet takes into account our expenses. Currently one lb of our Brazilian (Running George) costs $11.55. With a 10% increase at origin, the price for a coffee shop ends up being $12.32 / lb. This is an increase of $.77/lb. While this is not insignificant, the increase is significantly less than 10%. Please keep in mind that green coffee and roasted coffee are two very different things. 

In conclusion, please keep in mind that we’re venturing into some new territory. Tug Hill Artisan Roasters is committed to quality sourcing, roasting and price transparency. Not only are we dealing with new tariffs, but we’re also dealing with C-market instability. Tug Hill Artisan Roasters will do its best to purchase coffee wisely. Thank you for your support and giving us the honor of being your coffee roastery. Please send any questions my way. It’s my job to communicate these changes to you so you can position your coffee business for success.