Caffeine Crunch ☕

Hot, iced, sweet, and bitter. Fills the room with aroma and the veins with caffeine.
Small, grande, or venti — size really doesn’t matter. It waits on kitchen counters and polished café tables and in paper cups with names often misspelled. 

According to the National Coffee Association (NCA), Americans drink an average of 517 million cups every single day. They spend more than $100 billion on coffee every year, supporting nearly 2.2 million U.S. jobs, adding more than $343 billion to the U.S. economy every year.

Without any doubt, America loves its coffee. But, there’s trouble brewing in this love affair. 

This deep-rooted national habit is now being tested — not by a change in taste, but by the steadily rising price of coffee. 

In August 2025, the retail prices jumped 21% from last year — the biggest spike since 1997, according to the Consumer Price Index. On a month-to-month basis, the prices have risen 4%, the fastest in 14 years. 

But why are coffee prices climbing so dramatically?

There isn’t one simple answer. It’s a potpourri of trade policies, supply chain tangles, and a dose of nature’s fury.  

In this edition of CrossDock, we break down America’s love affair with coffee, why a global shortage is causing the price hikes, and how tariffs and trade policies are adding fuel to the fire.

But to understand today’s caffeine crisis, we need to know why America loves coffee in the first place. For that, we travel back to 18th-century Boston, to the time and place when coffee first became entwined with the nation’s history.

Over 4 million professionals start their day with Morning Brew—because business news doesn’t have to be boring.

Each daily email breaks down the biggest stories in business, tech, and finance with clarity, wit, and relevance—so you're not just informed, you're actually interested.

Whether you’re leading meetings or just trying to keep up, Morning Brew helps you talk the talk without digging through social media or jargon-packed articles. And odds are, it’s already sitting in your coworker’s inbox—so you’ll have plenty to chat about.

It’s 100% free and takes less than 15 seconds to sign up, so try it today and see how Morning Brew is transforming business media for the better.

Check it out

Coffee reached American shores in the 1600s. But in those early days, it played only second fiddle to tea — the colonies’ true favorite. It would take nearly two centuries and a tax imposed by the British Crown before coffee finally stepped into the spotlight.

The year was 1773.

The warehouses of the East India Company in London were overflowing with unsold tea. The British Parliament, to rescue the struggling company, passed the Tea Act of 1773. This act essentially granted the Company the right to directly ship its tea to North America and the right to the duty-free export of tea from Britain to the American colonies.

But the American colonies did not like it. The colonists opposed the Tea Act because it wasn’t really about tea — it was about control. By granting the East India Company a monopoly, the Act cut out colonial merchants and forced them to accept Parliament’s right to tax them without representation. 

This triggered protests across the colonies. And in Boston, on the night of December 16, 1773, it reached a breaking point. Colonists boarded three East India Company ships in the harbor and dumped 342 chests of tea into the water. The protest is known as the Boston Tea Party, and it set in motion the American Revolution.

The protest also changed America’s choice of beverage. Tea —  once cherished — now carried the bitter taste of the British Empire, and coffee was not just an alternative; in fact, it became the patriotic choice. 

Cut to the present: In 2024, the United States imported about $9 billion worth of coffee, cementing its position as the world’s largest coffee importer. That was up from $8.2 billion and 1.38 million tons in 2023 — proof that America’s appetite for coffee keeps growing.

Interestingly, despite drinking more coffee than almost any other nation, the United States grows almost none of it — barely 1% of what it consumes. Nearly 98% of the coffee beans are imported, with nearly 80% of U.S. imports coming from Latin America. Brazil alone supplies about 35%, and Colombia around 27%.

This near-total dependence on imports is a big reason why prices have been increasing so sharply. In fact, it is Supply Chain 101 – when your supply comes from overseas, every disruption there hits home. And in this case, nature had the biggest hand of all.

“Way down among Brazilians
Coffee beans grow by the billions
So they've got to find those extra cups to fill
They've got an awful lot of coffee in Brazil.”

This song by legendary Frank Sinatra aptly describes the dominance of Brazilian coffee. For more than 150 years, Brazil has been the world’s coffee powerhouse. It dominates the production of Arabica, the milder, more aromatic bean that makes up about 60% of all the coffee we drink.

Brazil alone supplies nearly a third of the global coffee market, and when it comes to Arabica, its share often creeps close to 40%. That kind of scale means the world’s coffee trade runs on a Brazilian clock: a strong harvest can keep prices steady, but a bad one can send them soaring. So when Brazil catches a cold, the rest of the coffee world sneezes. 

And coffee is not just any crop — it’s a crop with demands. Arabica, especially, grows best in what experts call the “coffee belt”: mild temperatures between 60°F and 70°F, steady rainfall, fertile soil, and a delicate balance of wet and dry seasons.

Too hot, and the flowers that turn into cherries dry out before they bloom. Too little rain, and cherries never ripen. Too much rain, and diseases creep in. Even small shifts in temperature or rainfall can slash yields or ruin quality. It needs ideal weather to yield the best results. But 2024 was anything but ideal for Brazil.

In 2024, the country endured its worst drought in over 70 years, with nearly 59% of its land under severe stress — an area roughly half the size of the United States. Rains failed, rivers dropped, wildfires spread, and above-average temperatures scorched plantations. 

The bad weather resulted in fewer coffee beans.

According to the National Supply Company (CONAB), the country produced 54.2 million 60-kilo bags in 2024/25, a decrease from earlier estimates and about 1.6% less than the 2023 harvest.

Productivity also weakened. Yields averaged 28.8 bags per hectare, down nearly 2% from the previous year.

The impact was most visible in Minas Gerais, Brazil’s largest coffee-producing state. The region harvested 28.1 million bags, a drop of 3.1% from 2023.

So, fewer beans mean higher prices.

The price shock quickly made its way to American shelves. In January 2025, the retail price of ground coffee hit a record $7 per pound. For context, that’s up from about $4 in January 2020. And by August 2025, the price climbed even higher — reaching an all-time peak of $8.80 per pound.

So when Arabica supplies tightened, to offset the price and supply crunch, roasters turned to Robusta — a stronger, cheaper variety often used in instant coffee and blends — to fill the gap. But nature had other plans. In 2024, Vietnam, the world’s largest Robusta producer, was punished by both drought and floods. 

Vietnam is the world’s largest Robusta producer, with about 97% of its coffee output coming from this variety. It supplies 16–17% of global coffee production — nearly a third of the Robusta market alone. For the 2024/25 season, the country was expected to produce about 29 - 30 million 60-kilo bags of green beans, almost all Robusta.

But there was a twist.

In December 2023, El Niño returned to Vietnam’s coffee heartlands for the second year in a row. The rains failed, and the dry season stretched deep into April 2024, just as coffee plants should have been flowering.

Vietnam’s coffee output for the 2023/24 crop year fell 20% year-on-year to 1.47 million metric tons — the country’s smallest harvest in four years. For a nation that supplies nearly a third of the world’s Robusta, it was a serious blow.

And when relief finally came, it was messy. Rains returned later in the year, but instead of balance, they brought disruption. In some regions, heavy downpours during harvest slowed picking and destroyed cherries.

According to Vietnam’s General Statistics Office, the country’s coffee exports in 2024 dropped 17.1% year-on-year to 1.35 million metric tons. Adding to the pressure, the Vietnam Coffee and Cocoa Association cut its 2024/25 production forecast to 26.5 million bags on March 12 — down from the 28 million bags it had projected just three months earlier in December.

Again, this drop in production levels led to a significant increase in prices. According to the USDA, the average Vietnamese export price jumped to $5,630 per tonne in 2024/25 — this was a 143% increase from 2023/24.

With both Brazil and Vietnam, which supply about 47% of the world’s coffee, facing droughts, floods, and erratic weather, output fell, and supply chains were disrupted. The squeeze naturally tightened global supplies, and prices surged.

And as if bad harvests weren’t enough, rising shipping costs added more pressure. Attacks in the Red Sea forced ships to take long detours around Africa, while a drought at the Panama Canal slowed traffic. This led to higher fuel prices, insurance, and container shortages — all making it more expensive to move coffee from farm to cup.

If nature’s fury and supply chain bottlenecks were one reason for the rise in coffee prices in the U.S., the other is man-made tariffs.

In July, President Donald Trump announced a fresh list of countries facing retaliatory tariffs. To the surprise of many trade experts, Brazil was included. The move raised eyebrows because the U.S. has long enjoyed a $6.8 billion trade surplus with Brazil and hasn’t run a trade deficit with the South American nation since 2007.

What’s worse, the tariffs slapped on Brazil were the steepest of all — 50%, the highest for any country. And for coffee, the impact was immediate. Coffee is Brazil’s second-largest export to the U.S., and roughly one-third of all U.S. coffee imports come from Brazil. With tariffs this high, that entire flow was shaken.

The numbers tell the story. Coffee shipments from Brazil to the U.S. have halved year-to-date, according to Vizion, a shipping data service. The decline accelerated in August, when shipments collapsed by more than 75% compared to August 2024. That’s a stark reversal from earlier in 2025, when Brazilian coffee was flowing freely into the U.S. In fact, in the first weeks of the year, shipments were consistently higher than 2024 levels, with year-over-year growth peaking at +36% in early February. 

For U.S. roasters, a 50% tariff is crushing. Take Brazilian Arabica beans, which in mid-2025 averaged about $3.50 per pound on the global market. With a 50% tariff, the landed cost jumps to more than $5.25 per pound before shipping, warehousing, or roasting costs are even added. For a mid-sized roaster importing 10,000 pounds a month, that’s an extra $17,500 in duties. 

Other coffee powerhouses are being hit too — Colombia, the world’s No. 2 exporter by volume, faces a 10% U.S. tariff, while Vietnam, the No. 3, is being charged 20%.

In practice, the costs of tariffs get passed along the chain — roasters raise their wholesale contracts, cafés and retailers pay more, and consumers feel it at the counter.

This has already started to happen. 

Paramount Coffee Company, one of the Midwest’s largest roasters and distributors, has already raised prices in response to U.S. tariffs.

J.M. Smucker, the maker of Folger's and Dunkin’ Donuts’ at-home coffee, is preparing its fifth price hike since mid-2024, with another increase coming this winter that will leave its coffee 20% more expensive than a year ago. The company points squarely to tariffs on beans from Brazil and Vietnam, which supply most of the 500 million pounds of coffee it imports each year.

Starbucks, however, is holding out for now. On its July earnings call, the company explained that its long-term buying contracts delay the impact of tariffs, so it expects coffee costs to really peak in 2026.

But for the rest of the industry and other small- and mid-sized businesses, that cushion is quickly running out. As contracts expire over the next few months, buyers will have no choice but to purchase beans at today’s much higher market rates — and that’s when the real price hikes will start to filter through to grocery shelves and café menus. 

So, you might ask why the U.S. can’t produce its own coffee?

Unlike other goods where tariffs might encourage domestic production, coffee is different — it simply can’t be grown across most of the United States, and the small harvests from Hawaii and Puerto Rico are nowhere near enough to meet America’s demand.

The simple reason is geography: coffee thrives only in the tropical “coffee belt,” the band of latitudes near the equator where temperatures hover between 60–70°F, rainfall is steady, and the soil is rich. Most of the U.S. mainland is far too cold or dry for those conditions. 

Only Hawaii, Puerto Rico, and small experimental farms in California can grow coffee at scale — and together, they produce just a fraction of America’s demand. Hawaii’s famed Kona coffee, for example, yields around 5–6 million pounds a year, while the U.S. consumes more than 3.3 billion pounds annually.

That’s less than 0.2% of what Americans drink. On top of that, labor and land costs make U.S.-grown coffee astronomically expensive: Kona beans often sell for $30–40 per pound, a luxury rather than a staple

Could coffee prices come down if Brazil’s weather improves and harvests recover? In theory, yes. A big Brazilian crop has often helped steady the market, lowering Arabica prices and easing volatility. But reports suggest that may not happen this time. Climate problems — droughts, unpredictable rains, and rising heat — are no longer rare in Brazil. They’ve become the new normal.

A recent executive order signed on September 6th by President Trump designated coffee as one of the nation’s “unavailable natural resources” — goods the U.S. cannot produce at scale — and therefore potentially exempt from future reciprocal tariffs. But there’s a catch: the exemption only applies to countries that have ongoing trade negotiations or formal deals with the U.S. Right now, neither Brazil nor Vietnam qualifies, which means the 50% and 20% duties still apply.

According to experts, coffee prices aren’t coming down anytime soon. For U.S. consumers, that means the morning cup of Joe will get expensive and stay that way for the foreseeable future.

This newsletter was written by Shyam Gowtham

Thank you for reading. We’ll see you at the next edition!