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US consumers face even steeper rises in the price of coffee and chocolate as a result of US President Donald Trump’s new tariffs on the world’s largest producers.
The levies, which will hit coffee imports from Brazil, Colombia, and Vietnam, are expected to push up prices in shops and cafés at a time when bean costs have already soared amid supply shortages.
The US imports the bulk of its coffee from Colombia and Brazil, the world’s largest producers of high-quality arabica coffee beans, whose goods will be subject to tariffs of 10 per cent under the new measures. Hefty 46 per cent levies on Vietnamese goods will also have an impact — the south-east Asian nation is the world’s main producer of the cheaper robusta beans typically used in instant coffee, and another key exporter to the US.
“Ultimately, the USA is the single largest importer of coffee in the world, the ultimate nation of coffee drinkers. So consumers will suffer,” said Kona Haque, head of research at commodity trader ED&F Man.
Haque said the tariffs would “immediately” push up the cost of green coffee to roasters, which would “inevitably” be passed on to consumers. “At the end of the day, chocolate and coffee are not like automotive or shipbuilding, which Trump is trying to encourage more domestic production of,” she said. “The USA simply cannot produce these products.”
Coffee prices have already risen to record highs in recent months owing to unfavourable weather conditions in key growing regions including Brazil. Meanwhile, cocoa prices have almost tripled in the past year because of extreme weather and disease hitting harvests, and are expected to jump further owing to higher tariffs on imports from Ivory Coast and Ecuador. Ivory Coast, the world’s biggest coca producer, has been hit with levies of 21 per cent.
Dirk Van de Put, chief executive of Mondelēz said in February that the maker of Oreo cookies and Toblerone was navigating “unprecedented cocoa cost inflation”.
Starbucks chief executive Brian Niccol warned during an earnings call in January that “higher prices to an already pressured consumer will likely impact our segment volumes and ultimate revenue and profitability”.
Starbucks’ share price was down nearly 3 per cent in pre-market trading on Thursday. Hershey’s stock fell 0.6 per cent, and Mondelez’s shares were broadly flat.
The US produces only a small fraction of its own coffee and cocoa, with Hawaii being the main domestic source of both.
Lucrezia Cogliati, Commodities Analyst at BMI said: “We believe that the recent announcement of US reciprocal tariffs will raise domestic coffee prices as the United States relies almost entirely on coffee imports to meet domestic demand, producing around 0.2 per cent of the coffee it consumes.”
He added that “as production of coffee in the US is essentially non-existent, we believe that increased tariffs will not boost domestic production but rather will translate into higher consumer prices, which could ultimately weigh on demand”.
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