Coffee and Tea Prices Surge Amid Tariffs, Small Businesses Struggle to Stay Afloat

US coffee prices in July 2025 jumped 14.5% year-over-year, while steep tariffs on imports like tea and spices are squeezing small businesses, forcing price hikes or quality compromises.

Food Prices Flat Overall, but Imported Beverages Climb Sharply

While the latest Consumer Price Index (CPI) data shows overall food prices remained flat from June to July, tariff-sensitive goods such as coffee beans, specialty teas, and spices have surged in price — sparking concerns among small retailers that depend on them.

According to the US Bureau of Labor Statistics, coffee prices in July 2025 rose 14.5% compared with the same month last year, reaching an average of $8.41 per pound (about 0.45 kg). In contrast, overall food prices were up only 2.9% year-over-year.

Cafés and Restaurants Face Rising Costs

Jessica Simons, owner of Bethany’s Coffee Shop in Lincoln, Nebraska, said her ingredient costs have jumped 18% to 25% since January.

“We’ve added a 3% surcharge for coffee while waiting to reprint menus with new prices, but changes happen so quickly we can’t update menus every time,” she told CNBC.

Beyond coffee, Simons also pays more for butter and tomatoes, forcing her coffee shop and a 24-staff restaurant she owns to raise prices despite already thin profit margins.

74% of Imported Food Could Face Tariffs

A recent Tax Foundation estimate suggests nearly 74% of US food imports — worth about $163 billion — could be subject to tariffs.

Josh Teitelbaum, a senior lawyer at Akin, explained that companies importing resources unavailable domestically, such as coffee or coconut water, have little ability to switch suppliers to avoid tariffs.

Spice and Tea Businesses Risk Being Pushed Out

Anjali Bhargava, founder of Anjali’s Cup, said her company sources nearly all caffeine ingredients internationally. Spices come from Vietnam, Thailand, Africa, and South America; tea and pepper from India; saffron from Afghanistan; and specialty retail cans from China.

She fears a 50% tariff on Indian tea will push prices beyond reach for smaller brands, giving large corporations a competitive edge.

“This tariff forces us to choose between maintaining quality and keeping our business alive. Many small brands won’t survive,” Bhargava said.

Tariff Impact Could Spread to Grocery and Retail

Heather Rice of KPMG warned that tariffs may change grocery store assortments. Seasonal imports like bananas, kiwi, and off-season blueberries could disappear from shelves due to higher costs.

She also noted that cuts to the Supplemental Nutrition Assistance Program (SNAP) would further weaken consumer demand, forcing retailers to lower forecasts.

Risk of Losing Diversity and Quality in the Marketplace

Experts caution that the global trade war will harm all sides — from consumers to producers.
High tariffs could make authentic, high-quality products prohibitively expensive, reducing market diversity and driving out small, independent businesses that have long enriched the US marketplace.