President Trump’s tariffs are coursing through the American (and world) economy, even if their macro effects are taking time to show up in the national statistics. Consider a case study in the daily institution of millions that is morning coffee.
This summer Mr. Trump hit Brazil with a 50% tariff because he
said the country is prosecuting his friend, Jair Bolsonaro. One problem for Americans is that Brazil is the world’s biggest coffee producer, and its beans are in more
President Trump’s tariffs are coursing through the American (and world) economy, even if their macro effects are taking time to show up in the national statistics. Consider a case study in the daily institution of millions that is morning coffee.
This summer Mr. Trump hit Brazil with a 50% tariff because he
said the country is prosecuting his friend, Jair Bolsonaro. One problem for Americans is that Brazil is the world’s biggest coffee producer, and its beans are in more than one of every three cups of joe brewed in the U.S. Every American coffee drinker either is paying more or soon will as a result.
The price of a pound of unroasted Brazilian beans has jumped to more than $6 from $4.50, says Dan Hunnewell, the owner of Coffee Bros., a specialty supplier in New York. He’s trying to keep his own prices steady “as long as possible,” he adds. “I will even eat some of the difference.” But if the 50% tariffs on Brazil continue, he expects to raise prices “pretty significantly” or buy beans from elsewhere, even if it changes the taste profile.
The U.S. has only a few regions suitable for growing coffee, and the amount they produce isn’t grande. Other countries face lower tariffs, but they can’t match Brazil’s supply, and as demand increases for beans from alternative sources, prices for non-Brazilian coffee will rise too, says Albert Scalla, the senior vice president of trading at the commodity broker StoneX.
Hence the jitters. Keia Booker and her husband Martyn Leaper own a small roaster-retailer in Portland, along with two coffee shops. They’re not rich, but they view their business as an extension of their values. She created a pricing scheme where affluent customers can choose to pay more to subsidize quality coffee for others. Its small size means Keia & Martyn’s Coffee buys on the spot market instead of signing a contract with an importer, so it has no hedge against tariff and price uncertainty.
“Our importers are talking about 10% to 20% increases on the bags that we’re purchasing now—but they’re also telling us it could be as high as 40% to 50%, depending on the coffee they’re buying and the tariffs,” Ms. Booker says. Due to the volatility, importers are also buying less for the spot market, and “we are soon going to be in a real pickle if there’s not extra coffee out there to purchase.”
Keia & Martyn’s Coffee has reluctantly raised prices by $2 or more for a 12-ounce bag because of the tariffs. Some customers have responded by buying coffee less frequently. Ms. Booker and Mr. Leaper had hoped to hire a third employee, but that’s on hold until they better understand the effect on their business. “It’s the consumer, the cafes, the roasters, the importers that are paying these tariffs, which are essentially taxes,” Ms. Booker says.
The coffee tale shows that tariffs at their essence are an income transfer from millions of individuals and businesses to the U.S. government. Like all taxes, they’re a windfall for politicians. In the case of coffee, tariffs don’t even protect a domestic constituency. They are a tax on American consumption pure and simple—a tax on Maga’s forgotten man.
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