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Margaret Nyamumbo, the founder of Kahawa 1893, a U.S.-based coffee company, is closely monitoring President Donald Trump’s fluctuating tariff policies, which have significant implications for her business. Sourcing coffee beans from African nations such as Kenya, Rwanda, Tanzania, and the Democratic Republic of Congo, Nyamumbo’s company has garnered attention for its mission to support female farmers in Africa. Since its inception in 2018, Kahawa 1893 has resonated with customers, who can “tip” farmers through a QR code on each coffee bag, and the company reported sales exceeding $3 million in 2023.
Nyamumbo’s experience highlights a broader industry trend, as only a mere 1% of the coffee consumed in the United States is produced domestically, as reported by the National Coffee Association.
With the uncertainty surrounding international trade agreements, commodity speculation, and potential corporate cost-cutting, Nyamumbo anticipates that the global supply chain for coffee will experience disruption. The extent of this disruption is contingent upon how tariffs ultimately settle, particularly for businesses like hers that rely heavily on imports from Africa.
Should tariffs remain unchanged and exclude African goods from exemptions, Nyamumbo foresees a difficult scenario for operating costs. “We’re going to have to raise prices,” she explains.
Implications of Tariffs on Coffee Importers
When Trump recently announced comprehensive tariffs, Kahawa 1893 appeared to be in a relatively favorable position compared to some competitors. None of the African countries she sources from were affected by tariffs exceeding the standard 10%. In contrast, companies sourcing from Vietnam, the second-largest coffee producer globally, could face tariffs as high as 46%.
Although the administration has temporarily reverted tariffs on many countries to the baseline 10%, Nyamumbo notes that this level can still adversely impact coffee businesses. “A 10% tariff is substantial. Coffee operates on slim margins,” she states, emphasizing that this percentage may equal the profit margin for many within the supply chain.
This shift in trade policy represents an abrupt change for Kahawa 1893 and others engaged in importing from Africa, especially given that U.S. trade with African nations was previously facilitated under the African Growth and Opportunity Act (AGOA), which aimed to promote economic growth in developing African nations.
The status of AGOA in the face of the new tariffs remains uncertain, as the act is due for renewal in September. Importers of African coffee are now caught in a waiting game, anticipating the outcome of negotiations ahead of the next major harvest period.
“We hope there will be some resolution by then,” Nyamumbo conveys. “Many are hoping for an exemption to be granted.”
However, trade advocates express concern regarding the prospects for AGOA. According to a recent communication from the Washington-based African Coalition for Trade, there appears to be no indication that AGOA imports will be exempt from the reintroduced 10% tariffs, suggesting a challenging outlook for the act’s renewal.
The Rising Costs of Coffee and Imports
Kahawa 1893’s challenges extend beyond coffee imports. Nyamumbo notes that the company also relies on materials from China, such as packaging and glass, which are subject to their own tariffs in light of escalating U.S.-China trade tensions. Current tariffs on certain Chinese products from the U.S. government can reach up to 245%.
Nyamumbo’s suppliers are actively seeking methods to mitigate these increased costs. They may consider rerouting shipments through alternative countries to offset the tariffs imposed on U.S. customers. Nonetheless, she cautiously acknowledges that her expenses are likely to increase.
The overall effect of these tariffs is expected to disrupt traditional coffee supply chains. Nyamumbo points out that this may lead to more Vietnamese coffee being redirected toward European markets, while African coffee imports to the U.S. could rise. “This volatility in the supply chain is likely to lead to rising prices,” she warns.
To navigate the impact of these rising costs while maintaining profitability, coffee companies may need to reconsider their strategies, whether through modifying material choices or altering their final product offerings. “Consumers might begin to see lower-quality coffee available, as roasters adjust to manage costs,” Nyamumbo explains. “Striking a balance between quality and the price consumers are accustomed to will be challenging.”
The alternative, she indicates, may involve higher prices for consumers, posing the question of how much more individuals are willing to pay. “Currently, a latte is nearing $10, and there’s already pushback from customers,” she shares. “Increasing the price further might lead to reduced demand.”
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