The North American coffee market is under threat due to the US administration's trade policies, which create uncertainty for industry participants. As IZ notes with reference to Reuters, potential US tariffs and possible retaliatory measures by Canada and Mexico are forcing companies to review their operating strategies.
Coffee companies have production facilities in several countries in the region, allowing them to efficiently serve customers. However, the possible introduction of tariffs makes it necessary to review supplies. The CEO of one of the region’s leading coffee companies, who asked not to be named, said there are difficulties with operations across the US-Canada border. In particular, Starbucks, which roasts coffee for Canadian stores in the US, has already begun to consider options for adapting to the changes.
Mexico plays a key role in supplying coffee to the US and Canadian markets, exporting both green and instant coffee. In turn, major international companies such as Nestle are actively investing in coffee production in Mexico, supporting local farmers and stimulating the production of robusta coffee. However, the political situation poses risks to exports.
While the 25% U.S. tariff on imports from Canada and Mexico has not yet affected the main forms of coffee sold on the market, traders are already starting to hedge against possible losses. Jeff Bernstein, managing director of Canadian company RGC, said the company has included a clause in its contracts that buyers will pay an additional 25% tariff if it is imposed. Some customers have already agreed to those terms.
In addition, there are growing concerns among market participants about possible restrictions on coffee imports from South America, where the bulk of coffee consumed in the United States comes from. Brazil, the world's largest producer and exporter of coffee, has come under the spotlight of US trade policy. According to Andre Acosta, a representative of broker Marex, President Trump has mentioned Brazil superficially in his speeches, which is causing concern among producers.
Bill Murray, president of the National Coffee Association, said coffee should be excluded from the list of products that could face additional tariffs. He noted that three out of four Americans regularly drink coffee, and any price increases due to new restrictions would negatively impact consumers.
The outlook for the coffee market in the face of new economic challenges remains uncertain. If the US does impose new tariffs on coffee imports, this could significantly change logistics chains and affect pricing at the regional level.
As previously reported in the article “Trump's Trade War Has Crashed the US Stock Market,” the US administration's economic measures have repeatedly impacted key markets, and the current situation with the coffee industry is another example of this.