NY Cafes Brace For Tariff-Induced Coffee Price Hikes To Threaten Already Slim Profit Margins – CoffeeTalk

The Trump administration has imposed steep US tariffs on Brazil, putting coffee shops in New York City at risk. Stone Street Cafe, a Manhattan-based cafe that sources green coffee beans from over 35 countries, is one of the many businesses affected by these tariffs. The cafe’s managing partner, Antony Garrigues, warns that long-term tariffs could put their business in jeopardy, as they already run on slim margins and the extra costs passed on from tariffs could make everything much more expensive.

Stone Street Cafe, based in Manhattan, sources green coffee beans from more than 35 different countries, including Brazil. Other coffee-producing nations like Vietnam, Colombia, Ethiopia, and Indonesia are also affected. The costs are passed down to the business owner and consumer, and while they are trying to absorb as much of the cost as possible, they may have to increase prices.

As climate change already inflates coffee prices, other cafes have already done so. Ciao Gloria, in Brooklyn, imports cocoa powder from Brazil and faces Trump’s 15% tariff on exports from the European Union. The cafe raised prices by about 25 cents per cup but plans to absorb any additional tariff costs for now.

Customers are already scrutinizing their receipts, with US coffee prices rising 14.5% in the year to July. Helina Seyoum, 29, who has reverted to making coffee at home, says that the idea of shifting baseline is “bad for Americans and our quality of life.” Aley Longo, 28, made sure she escaped the confines of her studio apartment and spoke to people outside work in an “affordable” way, now it’s strictly a weekend activity.

Tariffs are causing instability in the coffee industry, and cafes without big pockets may struggle to survive.

US cafes are facing pressure from the coffee producers they source from, as Brazil is the world’s largest coffee producer and exporter. The Brazilian Soluble Coffee Industry Association has criticized the 50% US tariff on Brazil’s exports as a “clear competitive disadvantage” as other leading countries for coffee production face lower rates. This decision could negatively affect American consumers who benefit from the quality and competitive price of Brazilian coffee.

Brazilian producers and exporters still hope to lobby for coffee to be exempt from US tariffs, arguing that the US produces very little coffee domestically. If this fails, Brazil’s Coffee Exporters Council will at least seek to reduce the tariff on coffee to 10%, in line with other Brazilian goods, including oil, orange juice, and aircraft. New coffee export deals with the US are on hold, and shipments ready to go are stuck in storage, adding costs for exporters. China has meanwhile approved 183 new Brazilian firms to export coffee, although the exporters’ council cautioned that sales may take time to materialize.

In Vietnam and Colombia, the world’s second and third largest coffee-producing nations, exporters hope that lower US tariffs on their coffee will help them steal a march on Brazil. Timen Swijtink, founder of Lacàph Coffees in Vietnam, said that tariffs won’t bring production back home, and any tariff cost goes straight to the American consumer. With the US tariff on Colombia only at the baseline 10%, small coffee growers across the country are shrugging off any immediate impacts.

Guilherme Morya, a coffee analyst at Rabobank, said the 50% tariff on Brazilian coffee may shift American buyers toward other sources. Alejandro Lloreda, a farmer at family-run Cafetal de la Trinidad, which produces specialty coffee, cautioned that the difference would only give Colombia a temporary advantage.

In New York, cafe owners find themselves in an equally uncertain position, with the tariffs to small businesses’ detriment.

Read More @ The Guardian