Understanding the Impact of New Tariffs on Coffee Imports

Editor’s Note: The White House is clarifying that Trump’s announcement of a 90-day tariff “pause” means that the “tariff level will be brought down to a universal 10% tariff” during that time, while “negotiations are ongoing.”

Article Summary:

Max Nicholas-Fulmer breaks down the new U.S. import tariffs announced by the Trump Administration, effective April 5. Despite talk of a “90-day pause,” the White House confirmed a universal 10% tariff on nearly all imports including coffee while negotiations continue.

Key points:

• Tariffs = taxes on importers, not foreign exporters. U.S. companies like Royal must pay immediately at customs, creating major cash flow strain and higher financing costs.
• Coffee impact: Most green coffee faces a 10% tariff, while Vietnam’s (world’s #2 producer, mainly Robusta) faces a 46% tariff, likely disrupting global Robusta supply chains and raising U.S. prices.
• Exemptions: Coffee already landed or shipped before April 5 may escape tariffs. Mexico and Canada remain tariff-free under USMCA—though decaf coffee processed there from other origins still incurs tariffs.
• Market implications: Expect volatility. Tariffs could raise U.S. coffee prices, pressure supply chains, and accelerate inflation across both commercial and specialty markets.
• Outlook: Tariffs can be lifted anytime by the President, but political uncertainty remains. Bipartisan legislation aims to return tariff authority to Congress, though Trump vows to veto.

What’s Going On? Understanding the Impact of New Tariffs on Coffee Imports

By now, you’ve likely heard: the Trump Administration has enacted broad tariffs on U.S. imports, effective April 5. Let’s be clear—tariffs are taxes, paid not by foreign governments, but by American companies. That means us. 

As a green coffee importer, Royal Coffee is directly responsible for paying these tariffs at the time of customs entry—via immediate ACH transfer. In real terms, that’s a sudden and significant increase in our cost of goods. To cover these payments, we must tap into our line of credit, which also means accruing additional interest fees. Consider this: a single container of Brazilian coffee can easily top $150,000 at current market prices. Add 10% to that and now scale that across our entire inventory. The numbers get serious, fast. 

What Are the Tariff Rates? 

As it stands, nearly all imported coffee is facing a minimum 10% tariff. 

Exceptions? Unfortunately, yes—and not in the good way: 

Vietnam faces a whopping 46% tariff. Royal doesn’t import much Vietnamese coffee, but this matters significantly for the industry. Vietnam is the world’s second-largest producer of Robusta. A 46% tariff will dramatically disrupt Robusta flows to the U.S., and unless renegotiated, could set off ripple effects across the global coffee market. Vietnam even offered to drop its 5.1% average U.S. import tariff* to zero in a reciprocal deal which was rejected by the Trump Administration.  

*Average of all products, according to the WTO 

Will Tariffs Apply to Coffee Already Contracted? 

It depends. Any SPOT coffee physically in the U.S. before April 6th is exempt. Additionally, coffee on its final vessel by midnight April 5th may also be exempt (we believe). But here’s the nuance: coffee that stops at a transshipment port on the way could still be hit, even if it left its origin port before April 5th. Most April arrivals are expected to be exempt, but it’s a case-by-case situation. Of course, we will only apply a tariff if it is assessed, and we will keep a record of all costs and will be able to provide if needed. 

How Are Tariffs Calculated? 

Tariffs are based on the FOB (Free on Board) value of the coffee at customs entry—not your final price. So, the added cost to you may be less than 10% in many cases. If someone tacks 10% onto your price without explanation, ask questions.  

However, keep this in mind: if a producer fixes their price in a higher market (say $4/lb) and the market dips to $3, that higher FOB is still used for the tariff calculation. That scenario is unlikely right now, but it could become common if prices soften further. 

What About Mexico?

Products from Mexico (and Canada) are tariff-exempt if the exporter complies with the USMCA trade agreement (essentially NAFTA 2.0). Many Mexican exporters qualify, but not all.  

It’s also important to note most of the green coffee used in decaf comes from other countries and is processed in Mexico or Canada. For example, we frequently ship coffee from Peru, Brazil, and Central America to plants located in both countries. These will receive a 10% tariff applied not only to the green coffee, but to the cost of the decaf toll as well. The tariff rate is assessed based on the declared import value of the product. Mexican coffee that is tariff exempt will still be tariff exempt if it is used in decaf. In those cases, the 10% tariff applies to both the green coffee and the decaf toll cost. 

 With Mexico now the only producing country with 0% tariffs, expect suppliers there to raise their prices. It’s a global market—and pricing tends to follow opportunity. 

How Will This Affect Coffee Prices? 

Unclear—and volatile. The NY “C” market dropped nearly 50 cents in three sessions, fueled by general market panic and a global shift toward risk aversion. The price of crude oil has declined below the significant level of $60/barrel, at which it is assumed it is no longer profitable for American drillers to operate. The long-term view? Murkier. 

Even before tariffs, the coffee market was fragile. The market was telling us that one more major global supply shock could be calamitous for the availability of coffee. This after the back-to-back small Brazilian frosts of 2021 and 2022, and the drought conditions, which persisted for much of 2024, have yet to fully resolve. Fundamentally speaking, those same market dynamics still exist. However, as of this moment, the world seems to be looking more at the potential for a global recession and the impact it would have on demand.  

Tariffs have just added pressure. Vietnamese Robusta will become unsellable in the United States with a 46% price increase. It will all need to be rerouted to Europe and other markets, which carries profound implications for the price of commercial grade coffee in the United States. Re-routing from Vietnam to Europe alone will squeeze U.S. commercial supply. Result? Either demand drops, or prices rise—likely a bit of both. Higher commercial prices would undoubtedly have knock-on effects to the specialty market as well.  

Looking Ahead 

It is important to remember that Donald Trump can decide to remove these tariffs at any time. Whether that happens is anyone’s guess. If they are removed, expect a jolt of market optimism across all sectors, coffee included. 

Meanwhile, bi-partisan bills to wrest control of tariff policy back from the President to Congress have already passed in the Senate and have been introduced in the House. Trump has said he will veto them if they reach his desk. If you disagree with the tariff policy, write to your Congressperson, and most importantly, vote in the 2026 election. 

—Max Nicholas-Fulmer, CEO, Royal Coffee, Inc.