Tariffs Hit Coffee Imports, Raising Costs and Threatening Small Shops

If you've noticed a spike in the cost of your morning coffee recently, you're not alone. A substantial new tariff on coffee imports has resulted in significantly higher prices for consumers and put pressure on businesses, particularly small coffee shops that are trying to navigate this unexpected financial landscape.

New Tariffs Driving Up Coffee Prices

In early August, the U.S. government enacted a 50% tariff on coffee imports from Brazil, a country that has been a major supplier of coffee to the United States. This new policy has created a ripple effect across the coffee market, leading to increased costs for everyone in the supply chain, from importers to local retail outlets.

The impact of these tariffs is stark. The Bureau of Labor Statistics reports that the average retail price for a pound of ground coffee reached $8.41 in July, which marks a 14.5% increase year-over-year. This escalation in prices not only affects individual customers but also places a burden on cafés and grocery stores that sell coffee products.

Effects on Consumers

The recent price hikes mean that consumers are now paying more for their everyday coffee purchases, affecting both branded and generic products alike. J.M. Smucker, which produces Folgers and Maxwell House, has announced four price increases this year alone, attributing this trend to rising green coffee bean prices and the newly implemented tariffs.

For many households, coffee is a staple that contributes to their morning routine, and as prices rise, it adds more financial pressure amid ongoing economic strains that families are facing.

Challenges for Small Coffee Shops

Small businesses, particularly those located in rural areas, are feeling the impact of these tariffs even more acutely. For example, Jessica Simons, owner of Bethany’s Coffee Shop in Lincoln, Nebraska, reported that her operational costs have surged by 18% to 25% since January:

“We had to put a 3% fee on the coffee because we are waiting for our new menus to be printed, reflecting the new price,” Simons explained. “But the prices have changed so quickly that we can’t reprint menus every time the price goes up.”

With lower profit margins, many small shop owners, like Simons, find themselves with no option but to pass these rising costs on to their customers in order to maintain their businesses through this challenging economic climate.