Coffee prices in the United States may rise further following President Donald Trump’s implementation of significant tariffs on Vietnam, a leading supplier. Vietnam, the top producer of robusta coffee used in instant beverages and espressos, faces a 46% tariff on its goods. This rate is among the highest imposed by Trump on U.S. trading partners, potentially disrupting supply chains amid already increasing coffee costs due to harvest deficits.
New York futures for arabica coffee, a premium variety found in many coffee shops, have remained near record highs due to adverse weather in major growing areas. The supply issues have led to robusta futures rising more than 40% in London over the past year.
On Thursday, robusta’s most active contract declined by up to 2.5%, while arabica futures fell by as much as 3.1%. However, both contracts managed to recover most of these losses by the market’s close.
Priyanka Sachdeva, a senior market analyst at brokerage firm Phillip Nova Pte. in Singapore, stated that the tariffs are likely to increase market volatility and worsen existing supply constraints, potentially causing U.S. coffee prices, particularly for robusta-based products, to rise.
Nguyen Nam Hai, the chairman of the Vietnam Coffee and Cocoa Association, expressed surprise at the high tax rate imposed on Vietnam, noting widespread concern, especially regarding signed export contracts. Nonetheless, Vietnam continues to export significantly to regions like the European Union, which helps mitigate the impact.
Despite incentives to use the cheaper robusta variety, Brazil, the world’s leading arabica producer, faces only a 10% baseline tariff, possibly making arabica a more attractive option. Steve Wateridge, head of research at TRS by Expana, pointed out that since main arabica producers like Brazil face lower tariffs, this might incentivize shifts toward using more arabica or Brazilian Conilon.
U.S. buyers have limited alternatives due to Vietnam being their third-largest supplier. According to Daryl Kryst, vice president of Soft and Agricultural Commodities Asia for StoneX Group Inc., U.S. stock inventories have little room for further depletion and will likely remain low under these tariffs.
While some importers might procure more from Brazil, Indonesia, and Ivory Coast, these countries cannot completely replace Vietnam’s high volume and quality, noted Sachdeva. She also indicated that switching to arabica might not be feasible since robusta is essential for instant coffee and espresso. Tariffs, she explained, will make it tougher for U.S. buyers to find affordable robusta, potentially leading to shortages.
Other soft commodities also experienced declines, except for New York cocoa prices, which rose 5.8% after the U.S. announced tariffs on major producer Ivory Coast. Cotton futures decreased by 4.4% due to weaker demand fears, reaching their exchange limit. Meanwhile, orange juice prices dropped 6% during intraday trading.
In London, robusta futures slightly fell by 0.22% to $5,388 a ton, while arabica declined by 0.93% in New York. New York cocoa increased by 3.6%, whereas London futures decreased by 1.4%. In New York, cotton prices fell by 4.4%.
