Coffee prices spike 21% in 1 year due to tariffs, impacting local shops: "It's a big unknown"
U.S. lawmakers from both sides of the aisle are trying to make a bill to exempt coffee from tariffs, as prices are up 21% compared to last year.
That's because the U.S. gets most of its coffee from Brazil, and as of last month, the South American country is facing 50% tariffs.
The effect is trickling down to even local coffee shops like Roots Roasting in St. Paul. Owner Peter Poire-Odegard opened the cafe seven years ago.
"The margins used to be significantly higher," he said.
After streamlining as much as he could he reluctantly made two price increases this year. A regular cup of coffee went from $3 to $3.80.
"We spent half again as much on green coffee since the beginning of the year that we did the same period last year. So went up 50%," he said.
He credits a bad growing season and the tariffs.
"Now that prices are changed, we're in a wait-and-see. Do people start drinking less? Do people start going out less? What happens to traffic counts? Does this still financially work? It's a big unknown," he said.
So far he's seen a cutback in the specialty drink orders. More people are ordering less expensive drip coffee but they're still showing up.
Poire-Odegard acknowledges that coffee is one of the last things people give up. Roughly two thirds of Americans have coffee every day, and most have three cups, according to the National Coffee Association.
He's hoping that his shop will adapt. Even though the cost of supply is going up, the cost of demand isn't drying up either.
The proposed bill by Congress to lower prices is called the "No Coffee Tax Act." It would have to be signed by President Trump.
As for tariffs in general, the White House said in a statement that "President Trump is strengthening the international economic position of the United States and protecting American workers."