Coffee is a highly interconnected industry. Across the supply chain, companies and people operate in concert to make a single cup. But the path from crop to cup is surprisingly fragile, with many companies operating on filter-paper-thin margins.
The potential challenges posed by a second Trump presidency are significant and multifaceted. From geopolitical tensions to trade disruptions and environmental concerns, the specialty coffee industry must now navigate a complex outlook. The interests of the industry won’t be on his agenda; Donald Trump doesn’t drink coffee.
During external shocks, the industry relies on personal relationships to maintain supply chain integrity. Industry relationships are likely to be put to the test in the year ahead. But by committing to our core values of quality, transparency and collaboration, the industry can better navigate challenges as well as find opportunities for growth and innovation.
Now, more than ever, it is essential for coffee businesses to be proactive in the face of uncertainty. Recent history offers a cautionary tale. The industry was too slow to foresee the consequences and effectively manage the recent shocks of Brexit, covid and cost inflation.
This time, we need to be better prepared. There’s still time to consider the opportunities and challenges in advance of the 47th president’s inauguration in January 2025. Based on the policies of the first Trump administration and his campaign pledges, we explore four key areas that will impact coffee in the year ahead.
Coffee sourcing and international stability
Global stability is desirable for the industry. Predictability is key. The coffee supply chain is long and fragmented. And there is a lag between consumer demand and farmers’ varying production volumes. External shocks can disrupt supply and make forecasting trickier.
Recent supply chain disruptions have primarily stemmed from conflicts within coffee-producing countries. A more isolationist America with a more combative foreign policy expands the risk of national conflicts escalating into regional ones.
There are a number of conflicts at risk of escalation, leading to further devastation, suffering, and loss of life. Taking a conflict directly addressed during the campaign, it’s probable that the incoming administration’s position on the conflict in Gaza and Lebanon will lead to a ramping up of the Israeli government’s goals. This makes further escalation of the conflict across the region more likely. The conflict has already spilled into Yemen, a coffee-producing country, and has agitated Iran and its proxies, affecting the shipping routes typically used to transport coffee to Europe.
There are simmering conflicts in multiple locations, especially across the coffee belt in Africa and Asia. While the coffee industry always faces geopolitical risk, these are likely to be heightened during a second Trump term. The domestic coffee industry needs to be prepared for more disruption abroad and more jittery consumers at home.
Coffee equipment and trade
American protectionism will rebalance international trade around a new equilibrium point. The long-term ramifications are unclear, but the changes are likely to be profound.
Throughout the campaign, Trump repeatedly committed to introducing higher tariffs on imports, especially those of Chinese origin. Among the first appointments to the forthcoming cabinet was the reappointment of the trade representative responsible for imposing trade tariffs on China during the 45th administration.
Increasing import tariffs will directly affect companies that sell into the United States. The implications are sweeping. For example, most coffee-making equipment is either made in China or largely composed of Chinese-manufactured parts. Even the iconic Italian and American brands rely on components made in China.
Of even greater significance are the knock-on consequences as other countries adapt. China is a significant player in global manufacturing and logistics as well as a growing consumer of coffee. Trade tensions will reshape the supply and demand of both coffee and coffee equipment, with the repercussions being felt globally.
There are likely to be structural changes to trading patterns and the international trading system itself. For example, consider how shipping prices surged as American demand for Chinese goods rose during Covid. Falling demand for Chinese manufactured items will result in fewer cargo ships routed from China to the Americas. And with Chinese factories facing falling demand in the United States, expect their sales efforts to focus on other developed markets including the United Kingdom and Europe. This will increase pressures on pre-existing trade and World Trade Organization agreements.
The impacts for the industry over 2025 will largely depend on the scale and pace of new US import tariffs. But the direction of travel is clear, and the consequences are likely to be profound over the duration of the Trump administration.
Concerns over trade and global stability also intersect. For example, there are fears that trade tensions may escalate in a way that precipitates a Chinese attempt to occupy Taiwan. Such a conflict would have greater global repercussions for trade than the war in Ukraine.
Pressures on the public finances
Disruption and uncertainty increase costs for businesses, the majority of which will necessarily be passed on to consumers. Additionally, there are likely to be increased pressures on nations’ finances as the Trump administration enacts isolationist policies and pulls back from international engagement.
The United States has been the key provider of military assistance to Ukraine following the Russian invasion. A reduction in their support will curtail Ukraine’s prospects on the battlefield and require European nations to increase military aid.
Both aspects will further strain Western economies and test priorities. Many European countries are already financially constrained with multiple demands on the public purse and higher levels of national debt following the Covid pandemic response. Additional military aid would have to be prioritised over public services, keeping interest rates higher for longer.
While domestic considerations may be secondary to the loss of life and suffering in Ukraine, many consumers are already cash-strapped and price-conscious. Consumer-facing coffee businesses have to think carefully about their pricing strategies, value propositions and how to maintain customer engagement in a constrained economic environment.
Hotter for longer
The impacts of climate change are a direct challenge to coffee’s future. As the world’s second-largest emitter of greenhouse gases, a diminished American commitment to cutting emissions will significantly impact global efforts to tackle climate change. Global temperatures will be higher for longer too. Coffee producers face a more uncertain future and mitigation measures take on greater importance to ensure the industry’s survival.
The first Trump administration commenced withdrawal from the Paris Agreement in 2017 and left in 2020. The United States rejoined in 2021 under the Biden administration. It is expected that the Trump administration will withdraw from the treaty again. This time, it’s expected to take just a year to withdraw, providing the Trump administration more time to enact its carbon-rich energy programme.
Plus, the election has come at a critical moment. The United States has currently committed to reduce greenhouse gas emissions to approximately half of 2005 levels by 2030. Achieving that goal now seems unlikely. The impacts are already being felt. COP29 opened this week and the American delegation from the Biden administration is impotent to make future commitments. Without American leadership, other key polluters, such as China and India, are less likely to make substantial commitments.
The coffee industry needs to plot a new route forward in a warmer world. New disease- and heat-resistant varieties need to be planted, on-farm mitigation measures bolstered and some land will eventually be deemed unviable for coffee production, necessitating new farms at cooler altitudes.
The path ahead
The year ahead looks uncertain. There will be changes to trade policy, international relations and progress on climate change. There are a wide range of scenarios for coffee businesses to consider, partly because many of the President-elect’s policy positions are ill-defined and partly because he’s erratic.
Trump’s first time in office was notable for his policy announcements on social media and abrupt shifts in strategy. The industry’s experience of Brexit and covid should have taught it how the broader geopolitical and economic contexts shape what’s feasible and viable. With both shocks, the industry was too slow to identify the ramifications. As a result, many coffee businesses were buffeted by high wage costs, inflation, and price-sensitive customers.
Another tangible impact of the volatility will be greater currency fluctuations, both as the Trump administration implements its trade and foreign policy programs and as Trump himself makes various remarks. Much of the coffee industry sets contracts in US dollars; prices may become increasingly unpredictable for both producers and consumers.
Coffee businesses must make plans for multiple contingencies and remain agile while executing sound business strategies. Options such as currency hedging are available. There is a window of opportunity for businesses to develop contingencies as we enter a new era.
Embracing core values amidst uncertainty
Despite external challenges, the specialty coffee industry can continue to thrive by adhering to its fundamental principles. On balance, a Trump presidency is unlikely to be good for the world, but that doesn’t mean new opportunities won’t arise. Market changes unsettle the current power balance between competing companies and create possibilities for upstart businesses. As volatile as the coming time may be, it could also be dynamic.
Specialty coffee seeks to uphold high standards of quality through transparency and nurture relationships with growers. The industry should double down on these commitments. Farmers are the foundation and the future of the industry. They will require support in managing price fluctuations and demand volatility as well as climate change.
Identifying points for collaboration among businesses is critical. Many specialty coffee businesses are comparatively small and have few resources to weather periods of adversity. However, together, the specialty coffee community is larger than any one of the high street chains. Sharing information and lending support become even more critical for ongoing success and viability. Collectively, we can be more agile than other parts of the industry, creating the possibility of taking greater market share from commodity coffee.
All specialty coffee businesses are bridges to consumers. We must continue to put our customers first, shielding them from impacts as best we can. Coffee provides a respite from the demands of the day, and baristas should offer normalcy whenever possible. However, global events will sporadically puncture this veneer, and in these moments, coffee businesses need to be prepared to draw a direct line between events and the consumer’s experience.
Again, specialty coffee – and hospitality at large – was too unprepared to communicate the ramifications of Brexit, instead choosing to stay quiet. As a result, coffee businesses have ended up paying the price because consumers don’t appreciate the context within which we are now operate.
An eye to the future
Donald Trump won widespread support, especially among lower-income Americans. They feel adversely affected by globalisation and have suffered a significant decrease in their living standards during the recent bout of inflation. They have voted for American protectionism in the belief that it will offer a financial remedy.
Their logic and comprehension of economics may be dubious, but let’s hope that the Trump administration can deliver for his constituency. However, it’s important to note that any success is likely to have global repercussions. Trump is clear that his policy prescriptions are a zero-sum game. He believes that for America to win, someone else has to lose.
It’s a watching brief over the coming months as the Trump cabinet takes shape and his policy agenda is announced. Look out for policies that impact the trade, economic, and geopolitical systems within which coffee operates. Part of contingency planning is exploring multiple scenarios, even incompatible ones. Scoping options now makes planning ahead easier.
While we make plans, we must also keep an eye on the medium term. This election marks an inflection point, the medium- and long-term ramifications of which will be more consequential than the Covid pandemic. Trump’s second term comes to an end on 20 January 2029, but don’t expect Trumpism to end.
Having won the keys to 1600 Pennsylvania Avenue, his acolytes won’t willingly hand them over at the next election. Trump has alighted on a compelling message for a new electoral coalition. Having reshaped the Republican Party in their image, this time it’s their agenda to reshape the nation. And that has a profound impact for all of us.
Specialty coffee needs to decide whether its interests are better served by its own ideals or Trump’s worldview. Where there’s a difference of opinion, we need to advocate for our beliefs and work to build a future that supports the interests of the industry and coffee drinkers.
That starts by appreciating the benefits that coffee brings to consumers. Then we can then identify the industry structure and global context that allows us to viability and sustainably deliver what Trump ironically calls, a cup of Joe.
