The coffee industry is begging President Trump to keep imports of instant, roasted, and decaffeinated coffees out of the trade fight with the European Union over airline subsidies, warning that hundreds of companies could close if he fails to intervene.
Instant coffee in particular is favored by older, poorer Americans who voted for Trump disproportionately in 2016. A sharp price hike on instant coffee could have consequences for Trump’s reelection chances in November if it were linked to his trade policy.
Coffee companies want the tariffs waived, saying that imports of those coffee products from the EU could nearly double in price under the White House’s proposed retaliatory tariffs, a serious blow to the domestic industry, which employs 1.7 million Americans.
“Several coffee brands such as Illy and Lavazza are dependent on imports from Italy for their U.S. business,” National Coffee Association president Bill Murray told U.S. Trade Representative Robert Lighthizer in a letter obtained by the Washington Examiner. “These companies distribute premium Italian-roasted coffee nationally across the United States.” He warned that a 100% tariff would force “hundreds of small businesses” dependent on these imports to shut down.
The Trump administration has placed tariffs on $7.5 billion worth of EU goods as a result of a long-running dispute over EU subsidies for Airbus. The tariffs range from 10% to 25%, but after a World Trade Organization ruling in its favor, the United States may raise the tariffs to as much as 100%. Among the tariffs the White House has said it may raise are levies on roasted, decaffeinated, and instant coffees.
Only about 20% of the roasted coffee in the U.S. is imported from Europe, as is about 11% of all instant coffee. But for some companies, importing from elsewhere is not feasible because of the cachet and brand recognition that European brands have, Murray told the Washington Examiner. People will switch to something else entirely, like tea.
“You can find instant coffee in 1 in 3 American homes,” Murray told the Washington Examiner. “It’s affordable, easy to prepare, and tends to be popular with older people who could really struggle with an 80% cost increase if these tariffs go into effect.”
European roasted coffee imports totaled $171 million in 2018, with $109 million of that coming from Italy. Instant coffee imports from the EU totaled $33.5 million in 2018, with Germany and Spain as the largest suppliers.
Instant and decaffeinated coffee are almost entirely imported products because the facilities to make them in sufficient quantities do not exist in the U.S., Murray said. Decaffeination is a complex process that requires specific expertise. The same is true for instant coffee.
“There is no real commercial capacity to produce soluble/instant coffee in the United States,” Murray wrote in the letter. U.S. coffee brands such as Folgers and Dunkin’ depend on instant decaffeinated coffees from suppliers in Spain.
European Trade Commissioner Phil Hogan met with Trump administration officials this week, but no agreement was reached.
