**Washington**: Coffee prices in the U.S. are likely to increase following President Trump’s 46% tariff on imports from Vietnam, the world’s largest robusta coffee producer. This comes amid existing price surges due to supply shortages and adverse weather conditions affecting coffee production globally.
Coffee prices in the United States are poised for further increases as a result of President Donald Trump’s significant tariff measures targeting Vietnam. This Southeast Asian country is the leading global producer of robusta coffee, which is essential for instant coffee and espresso drinks. The decision to impose a 46% tariff on goods imported from Vietnam is among the highest rates enacted against U.S. trading partners and is set to disrupt the established supply chains at a time when coffee prices have already surged due to harvest shortfalls.
Market data indicates that New York futures for arabica coffee, which is predominantly served in coffee shops, have remained near record highs. This price escalation is attributed to adverse weather conditions affecting vital coffee-growing regions. In addition, robusta coffee futures in London have risen over 40% within the last year due to similar supply constraints.
On the day following the tariff announcement, coffee futures experienced fluctuations at market opening, with the most-active contract for robusta falling as much as 2% before recovering some of those losses. Arabica futures also witnessed a decline. Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova Pte. in Singapore, remarked, “The tariffs will likely add to coffee market volatility and could exacerbate existing supply tightness.” She further noted, “U.S. coffee prices could rise, especially for robusta-based products.”
The ramifications of the tariffs have prompted significant concern within Vietnam’s coffee industry. Nguyen Nam Hai, chairman of the Vietnam Coffee and Cocoa Association, expressed his disbelief regarding the high tax rate, stating, “Everyone is worried, especially about the signed export contracts.” Despite this, Vietnam maintains a diverse export portfolio, shipping to other markets such as the European Union which may help mitigate some of the impacts of the tariffs.
Amidst these developments, Brazil, the world’s largest arabica producer, faces only a 10% baseline tariff, which could incentivise a shift towards arabica coffee consumption. Steve Wateridge, head of research at TRS by Expana, observed the potential for a market shift, saying, “The fact that all the main arabica producers seem to be at a 10% tariff rate, whereas Vietnam and Indonesia are much higher, there may be a change in the flow as there’s an incentive to use more arabica or Brazilian Conilon.”
However, the shortage of alternatives for U.S. buyers complicates the situation, as Vietnam is the country’s third-largest coffee supplier. Daryl Kryst, vice president of Soft and Agricultural Commodities Asia for StoneX Group Inc., warned that U.S. coffee stocks are already low, with limited capacity for further reductions.
While some importers have expressed intentions to increase their coffee purchases from countries such as Brazil, Indonesia, and Ivory Coast, these nations are unable to match Vietnam’s high volume and consistent quality. Sachdeva pointed out that even as buyers consider alternatives, robusta’s integral role in instant coffee and espresso renders a shift to arabica impractical. She affirmed, “The tariffs will make it even harder for U.S. buyers to secure affordable robusta, leading to potential shortages.”
The evolving landscape of coffee prices and supplies in the U.S. highlights the complexities and interdependencies of global agricultural trade, especially in light of tariff-related pressures.
Source: Noah Wire Services
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