Trump’s Coffee Tariff Reversal: What It Means for Inflation, Imports & Coffee Stocks
What’s the News: Coffee Tariffs Get a U-Turn
In an interview on Fox News’ The Ingraham Angle, President Trump said:
“We’re going to lower some tariffs. We’re going to have some coffee come in. We’re going to take care of all this stuff very quickly, very easily.”
According to the report, the U.S. coffee price index rose 18.9% in September year-over-year.
Retail coffee prices reportedly jumped nearly 21% in August compared to a year earlier, partly attributed to Trump-era import duties.
The statistics show that U.S. imports matter: the U.S. imports more than 99% of its coffee, with Brazil supplying about 30.7% of U.S. coffee imports by net weight, followed by Colombia (~18.3 %) and Vietnam (~6.6 %).
In short: facing inflation-pressure at the breakfast table, the administration is signalling intervention via tariffs.
Watch President Trump's comments here (@2:30):
The Background: Why Prices Are So High
Tariffs and coffee supply
The U.S. tariffs on coffee imports under the Trump-era ramp-up are a key driver of higher costs. For example, beans from Brazil faced tariffs of ~50%, Vietnam ~20% and Colombia ~10% under reciprocal trade measures.
One analyst noted U.S. roasters had to negotiate with suppliers who were withholding shipments as the tariffs increased cost burdens.
Coffee is part of the consumer price basket, and steep price rises contribute to inflationary pressure. Given the average U.S. household’s sensitivity to price hikes for groceries and breakfast items, this poses a political as well as an economic risk.
Trade and policy response
The tariff reversal pledge suggests two things:
- The administration recognizes the inflation/consumer-cost backlash and is responding.
- There may be broader trade-policy recalibrations, especially for commodities where the U.S. has negligible domestic production.
Market & Options Angle: Stocks & Sectors to Watch
What sectors are exposed?
- Coffee roasters and retailers: Companies that buy large volumes of imported coffee beans face margin risk when input prices spike.
- Consumer goods/grocery chains: Rising grocery costs squeeze consumer budgets and may shift spending patterns.
- Agricultural trade/import supply chains: Entities dependent on global commodity flows may be impacted by tariffs, supply-chain disruptions or relief.
Hot tickers to monitor via Unusual Whales
- SBUX (Starbucks Corp) – A major roaster/retailer with exposure to bean-cost inflation and consumer sentiment.
- KDP (Keurig Dr Pepper) – Another consumer-beverage player in the coffee category.
- WMT (Walmart Inc) – Broad retail exposure; coffee is one of many consumer goods sensitive to input/trade-cost shifts.
- KR (Kroger Co) – Major grocery chain; shifts in coffee cost may reflect broader grocery inflation pressure.
Options strategies to consider
- Short-term call or spread in SBUX: If tariff relief occurs, bean costs may fall, margin improves, giving upside.
- Put spread in KDP or grocery stocks: If prices remain elevated or tariffs persist, consumer softening may hurt volume.
- Straddle on WMT ahead of earnings: Given the input-cost uncertainty and consumer-sentiment risk, volatility may be mis-priced.
Why This Matters
- Inflation risk: Policy moves now could moderate one component of inflation (coffee), but may signal broader efforts or limitations in trade policy’s impact.
- Consumer behaviour: With consumers facing higher food/beverage costs, discretionary spending may shift—renting more importance to value/volume.
- Corporate margin pressure: Companies with imported inputs may face dual headwinds: cost inflation and supply-chain disruption.
- Trade-political risk: Tariff rollback raises questions: Will future tariffs be reversed? Which other commodities may be next? The uncertainty alone can move markets.
If you want to keep tabs on unusual options flow, track these names above, and stay ahead of trade-policy and commodity-driven market catalysts, sign up for Unusual Whales now.