Coffee Prices Climb as Market Reacts to Uncertainty

Coffee prices continued their upward march this week, despite the fact that President Donald Trump ultimately scrapped his proposed 25% tariff on Colombian imports. The initial threat, made during a dispute over deportation flights, was enough to jolt the coffee market, pushing Arabica futures higher.

Colombia, the third-largest coffee producer after Brazil and Vietnam, plays a crucial role in global supply. On Friday, Arabica futures closed at $3.48 per pound on the Intercontinental Exchange. By Monday, prices had climbed to $3.49, marking a 0.5% increase. By midday Tuesday, futures reached $3.53 per pound, up 1.7% from Friday’s levels. While a fraction of the sharp 13% jump seen in December, the trend confirms ongoing supply concerns that have kept coffee prices elevated since 2011. Year-over-year, Arabica prices are up 60%, with weather disruptions in Brazil and Colombia exacerbating production shortfalls.

The US, which imports nearly $9 billion in coffee annually, relies heavily on Colombian beans, making the market highly sensitive to trade policy shifts. Colombia accounted for $1.4 billion of those imports through November, second only to Brazil. Major buyers like Starbucks, Nestlé, and Keurig lock in long-term contracts, delaying price increases for consumers. But that doesn’t stop businesses from adjusting prices gradually, anticipating potential cost spikes.

What Does This Mean for Me?

Even without new tariffs, coffee prices remain under pressure. Supply constraints persist, and retailers will likely pass costs down to consumers. Whether driven by political uncertainty or fundamental market conditions, the reality for coffee drinkers is clear: the price of their morning cup is heading higher.