US Coffee Tariffs: Impact on Exports and Importers

US Coffee Tariffs: Impact on Exports and Importers

In 2018, the United States imposed tariffs on several countries, including Brazil, Colombia, and Vietnam, in response to what it deemed as unfair trade practices. One of the affected industries was the coffee sector, with tariffs ranging from 10% to 20% on coffee imports. This move had significant implications for both coffee exporters and importers in the US.

Impact on Exports

Coffee-producing countries were among the hardest hit by the tariffs. The main coffee-exporting countries, including Brazil, Colombia, and Vietnam, had to absorb the increased cost of exporting coffee to the US. This led to a significant reduction in the quantity of coffee exported to the US, as coffee producers sought to maintain their profit margins.

The impact on coffee exports was particularly severe in Vietnam, which is the world’s second-largest coffee producer. In 2018, Vietnam’s coffee exports to the US fell by 14% compared to the previous year, resulting in a loss of around $200 million in revenue. The country’s coffee industry was already struggling with low prices and withering demand, making the tariffs a significant blow.

Colombia, another major coffee-producing country, also felt the impact of the tariffs. The country’s coffee exports to the US fell by 12% in 2018, resulting in a loss of around $150 million in revenue. The Colombian coffee industry is known for its high-quality coffee beans, which are highly sought after by US roasters. However, the tariffs made it more challenging for Colombian coffee producers to compete with other countries, such as Brazil, which has a lower cost of production.

Impact on Importers

The tariffs also had a significant impact on coffee importers in the US. With the increased cost of importing coffee, importers had to either absorb the cost or pass it on to consumers. Many importers chose to absorb the cost, which reduced their profit margins. Others passed the cost on to consumers, which led to higher prices for coffee.

The impact on importers was particularly severe for compact and medium-sized businesses, which often have lower profit margins than larger companies. These businesses may not have been able to absorb the increased cost of importing coffee, which could have put them out of business.

The tariffs also led to a shift in the types of coffee beans being imported into the US. With the increased cost of importing Arabica beans, many importers turned to Robusta beans, which are cheaper to produce and import. This shift in demand has had a significant impact on the global coffee market, with Arabica bean prices falling and Robusta prices rising.

Conclusion

The US coffee tariffs had significant implications for both coffee exporters and importers. The tariffs led to a reduction in the quantity of coffee exported to the US, resulting in a loss of revenue for coffee-producing countries. The tariffs also had a significant impact on coffee importers in the US, with many having to absorb the increased cost of importing coffee or pass it on to consumers.

The impact of the tariffs was felt throughout the global coffee industry, with coffee prices rising and demand shifting towards cheaper Robusta beans. The tariffs also led to a shift in the types of coffee beans being imported into the US, with many importers turning to Robusta beans to reduce their costs.

FAQs

• What were the US coffee tariffs? The US imposed tariffs ranging from 10% to 20% on coffee imports from several countries, including Brazil, Colombia, and Vietnam.
• How did the tariffs affect coffee exports? The tariffs led to a reduction in the quantity of coffee exported to the US, resulting in a loss of revenue for coffee-producing countries.
• How did the tariffs affect coffee importers? The tariffs led to a significant augment in the cost of importing coffee, resulting in higher prices for consumers and reduced profit margins for importers.
• What was the impact on the global coffee market? The tariffs led to a shift in demand towards cheaper Robusta beans, resulting in rising prices and falling demand for Arabica beans.
• Are the US coffee tariffs still in place? The US coffee tariffs are no longer in place, as the US and Brazil reached a trade agreement in 2020 that eliminated the tariffs.