By Rianna Tobin
(Submitted as part of the Open Politics Student Blogs)

Why a cup of coffee costs more—and who’s paying the price.

January 2025, saw coffee prices surge to unprecedented heights, leaving both consumers and industry professionals wondering what’s driving the increase and whether there will be any relief ahead. The New York coffee market saw record-breaking prices week after week, with green coffee prices reaching an all-time high. DRWakefield’s weekly market report from 17^th February a 31% rise since New Year's Day, closing one week at 419.75 US cents per pound of coffee (c/lb), a huge increase compared to the February 2024 figures of around 180 c/lb.

The price surge coincided with heightened global political tensions, particularly President Donald Trump’s trade wars, which threatened tariffs on countries from Canada to Mexico. While the tariffs were not directly aimed at coffee production, countries like Colombia—major coffee producers—were impacted, sending ripples through global supply chains.

According to Fairtrade Foundation, over 125 million people around the world depend on coffee for their livelihoods—many of whom are smallholder farmers and producers in countries such as Brazil, Ethiopia, Colombia, and Vietnam. Brazil remains the largest exporter of coffee globally, but millions of farmers in East Africa and Central America also rely heavily on coffee cultivation as their primary source of income. This makes coffee one of the world’s most traded agricultural commodities, second only to crude oil. However, coffee production is inherently unstable, with small-scale farmers in regions like Honduras and Uganda particularly vulnerable to income fluctuations due to volatile global prices and climate change. For consumers, these price hikes translate into higher costs at cafes and grocery stores, which can influence purchasing behaviour.

Beyond trade wars, climate-related events, shifting global demand, and ongoing supply chain disruptions have also played significant roles in driving the rise in coffee prices. So, to what extent have the trade wars contributed to this volatility, and what other factors are at play?

How Have Trump’s Trade Policies Disrupted the Coffee Supply Chain?

President Trump’s tariffs on U.S. trade partner countries, beginning in April 2025 with 'Liberation Day', significantly impacted coffee-producing nations. Brazil and Colombia, which supply up to 80% of the U.S. coffee demand, were subjected to a 10% import tariff, while Vietnam, the world’s second-largest coffee producer, faced a 46% tariff. This could add $2,500 per metric ton to the price of robusta imported into the U.S. These elevated import costs are likely to drive up robusta prices domestically, with the additional expense passed on to both roasters and consumers. According to the Perfect Daily Grind, this could result in an increase of up to 50 U.S. cents (around 37 British pence) per cup. For context, this means that an average $3.00 cup of coffee could rise to $3.50—an increase of over 15%, which could significantly affect both consumer habits and business margins across the coffee supply chain. Vietnamese exporters may redirect their coffee to other markets like Europe to avoid U.S. tariffs, potentially creating a surplus of robusta globally. This could lead to a split in pricing, where countries not affected by the tariffs—such as those in Europe—pay significantly less for robusta than the U.S., resulting in a two-tiered or bifurcated pricing system in the global coffee market. In turn, US roasters may look to arabica alternatives from countries with lower import tariffs, driving up the price of arabica globally, temporarily benefitting countries on lower tariffs but inevitably leading to supply strains, overharvesting or a demand drop-off as prices peak too high.

The freeze on U.S. foreign aid through USAID, introduced under the Trump administration, represents another contributing factor. This suspension disrupted development projects aimed at improving coffee yields in vulnerable regions such as parts of Central America and East Africa, further straining supply chains and placing additional pressure on the industry.

Beyond Tariffs: Other Forces Behind Rising Coffee Prices

 While Trump’s trade wars have contributed to coffee price volatility, prices have been steadily rising for several years due to other factors. One significant issue is adverse weather, particularly in Brazil, where prolonged dry and hot conditions have led to downward revisions of coffee production forecasts. Erratic rainfall, rising temperatures, and extreme weather patterns—widely linked to climate change—have made coffee crops increasingly vulnerable, resulting in lower yields and greater susceptibility to disease. These challenges have driven up both production costs and consumer prices. Ironically, while climate change is a growing concern for coffee producers, Trump has repeatedly dismissed its significance, despite its clear impact on global agricultural markets.

Another factor driving price increases is the disruption of global supply chains, particularly shipping delays and higher transportation costs. The Red Sea Crisis of 2023–2024, triggered by attacks on commercial vessels by Houthi rebels, forced many ships to reroute around the Cape of Good Hope—adding around ten days to delivery times. This diversion led to a sharp rise in shipping costs and a shortage of available freights and containers. In response, Trump has taken a hardline stance, directing U.S. military action to target Houthi strongholds and secure maritime routes. While this show of force has been welcomed by some shipping and trade groups eager to restore normal operations, it has also sparked criticism from international observers concerned about escalating regional tensions and the potential for wider conflict.

The surge in coffee demand from emerging markets such as China and India are also contributing to the rising prices. China’s coffee consumption is growing rapidly at 15% annually, while India’s demand is increasing by 1%. With populations exceeding a billion in both countries, this increased demand places additional pressure on coffee producers, driving up competition for certain varieties and pushing prices higher globally.

Is a Stable Future on the Horizon for Coffee Prices?

As we look ahead, one question remains: will the coffee market stabilize, or are we witnessing a fundamental shift in how coffee is produced, priced, and consumed? Only time will reveal the long-term impact of Trump’s trade wars on the coffee industry. For consumers, the effects are already clear—higher prices at cafes and grocery stores have become the new norm. For producers, especially small-scale farmers, the uncertainty about future income adds another layer of complexity to their already fragile livelihoods.

What is certain, however, is that price fluctuations will persist as a defining feature of the coffee market. Coffee prices are deeply intertwined with the volatile global landscape, influenced by political instability, climate change, and unsustainable demand pressures. The challenges faced by coffee producers and consumers alike underscore the need for a more resilient and adaptable coffee industry in the face of an increasingly unpredictable global environment.