At Lost Sock Roasters, a quaint coffee roasting business nestled in Washington, D.C., the rich aroma of freshly roasted beans fills the air, an endearing hallmark of the establishment. However, Jeff Yerxa, who co-founded the company nearly a decade ago alongside Nico Cabrera, finds the scent has become so familiar that he hardly notices it anymore.
What has caught his attention lately, however, is a looming challenge: tariffs.
This month, President Donald Trump announced plans to impose a staggering 50% tariff on all goods imported from Brazil— a country that is not only the world’s largest producer of coffee but also a source of roughly 30% of the U.S. coffee imports. This announcement follows a pre-existing 10% tariff affecting nearly all imported goods, sending alarm bells ringing throughout the U.S. coffee industry, particularly among small roasters like Lost Sock.
Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, emphasizes the gravity of the situation, stating, “When people go to their local coffee shop, whether it’s Starbucks or something else, by and large they will likely be buying some form of Brazilian coffee. A 50% tariff will kill that market.”
Although the tariffs on Brazilian imports—and other coffee-producing nations—aren’t set to take effect until August 1, uncertainty is already reverberating throughout the coffee sector,
Yerxa expresses his desire to withhold reaction until the details become final, yet he acknowledges that profit margins are perilously thin. “It’s the uncertainty that’s probably the worst,” he remarks.
According to de Bolle, consumers will ultimately bear the financial brunt of these tariffs. “It’s a massive price impact,” she notes.
Beyond Brazil, the tariff threats are extensive. The Trump administration has announced tariffs on imports from other significant coffee-producing nations: Vietnam (responsible for 17% of the world’s coffee), Colombia (8%), and Ethiopia and Indonesia (both at 6%).
Yerxa worries about potential impacts on pricing but maintains a wait-and-see approach. “I don’t want to raise prices,” he states, “but we’re seeing increased costs of 30% on coffee, potentially.”
Amidst these developments, Trump has defended his trade policy, asserting that the tariffs are essential for protecting American jobs, renegotiating trade agreements, and reducing the trade deficit.
In the case of Brazil, Trump has suggested that the proposed tariffs are a form of retribution tied to the treatment of former President Jair Bolsonaro, who is currently on trial for his actions surrounding the 2022 election.
These explanations appear unconvincing to coffee roasters like Yerxa and Colby Barr, CEO and co-founder of Verve Coffee Roasters in Santa Cruz, California. They argue that, apart from small coffee farms in Hawaii and California, the U.S. does not produce coffee at a scale that meets domestic consumption.
“It’s a tax on Americans’ mornings,” Barr explains.
The past few years have already been turbulent for the coffee sector, impacting prices significantly. These fluctuations can be attributed to a combination of the COVID-19 pandemic and a series of low-yield coffee harvests in Brazil owing to adverse weather conditions such as drought and high temperatures, both exacerbated by climate change.
According to the Bureau of Labor Statistics, roasted coffee prices surged by 12.7% in June compared to the year before, with instant coffee seeing an even steeper rise of 16.3%. The average retail price for a pound of ground coffee reached $8.13 in June, exceeding $1 more per pound since the year’s beginning.
Nika Finkelstein, a 27-year-old consumer, is already facing the reality of rising coffee prices. While she often brews coffee at home, she treats herself to outings at coffee shops like Blue Bottle Coffee near Union Station in D.C. However, the thought of further price increases due to tariffs might lead her to cut back on her cafe visits.
“I would just have to reel back on spending money at coffee shops and just make it from home, which I can do—it’s just not as fun,” she shares.
The dependence on Brazilian coffee stems from its sizeable production capacity, low costs, suitable climate, and appealing flavor profile, according to Yerxa and de Bolle.
Yerxa adds, “Most of the industry relies on those coffees to be the backbone of their blends.”
Lost Sock Roasters prides itself on its single-origin, premium coffees sourced from a myriad of countries each year. However, Brazilian beans play a vital role in some blends, cultivated through longstanding relationships with two cooperatives in Brazil.
The process of importing these beans is complex, requiring international partnerships, contracts negotiated well in advance, and meticulous planning. Lost Sock maintains coordination with producers and exporters, placing specific orders for designated amounts from various Brazilian farms, warehousing them in the U.S. upon arrival.
The responsibility of tariff payments initially falls on the importer when bringing beans into the country. Yerxa elaborates that the additional cost of tariffs would simply be included as another line item on the receipts they receive upon releasing the coffee. “That tariff would just be another line item on the receipt that we’re getting when we release that coffee. And then for us, we take that coffee price, and again it’s added on to the price per pound of that coffee, when we come up with the pricing for wholesale and for retail.”
De Bolle indicates that if tariffs are enacted on August 1, it may take several months before consumers notice the price hikes in cafes or restaurants.
Typically, businesses buy in bulk, amassing enough coffee to last for some time—potentially a few months. However, those purchasing coffee beans at grocery stores might feel the impact of the tariffs sooner.
“For people who don’t stock up, so the regular consumer who’s going to the supermarket and getting their coffee, maybe those price increases will be felt sooner,” de Bolle explains, noting the perishable nature of coffee can limit the benefits of bulk purchasing.
The potential ripple effects of these tariffs are troubling. If they remain in place, Lost Sock may be forced to reevaluate its sourcing strategies regarding Brazilian coffees, even if switching away from established partnerships is not an option for Yerxa.
“It feels unfair to pull out of a relationship when the going gets tough,” he admits.
Instead, he anticipates absorbing some of the costs in hopes that prices may normalize in the future.
However, Barr warns that should Brazilian coffee prices surge, roasters will quickly look to alternate sources, but many of these new options are also subject to tariffs.
“It’s really, really difficult, and more like impossible, to really prepare for it,” Barr states. “Tariffs don’t help the coffee producer. They don’t help the small- and medium-sized businesses across the country, and they don’t help the consumer. Why are we doing it?”
image source from：npr
