American consumers may shrug their shoulders about tariffs on steel and lumber. (How often, after all, do you expect to buy a new car or build a deck?) But most of us feel coffee tariffs every morning as we switch on a Mr. Coffee or pull into a Dutch Bros. drive- thru. Today, 66% of American adults start their day with a cup of joe, the National Coffee Association estimates. The huge demand may be why, despite the challenges and growing costs, entrepreneurs keep betting on the coffee industry. That doesn’t mean they aren’t feeling the squeeze. Julia Peixoto Peters honed her sharp sense of commodity and coffee shop prices by running Peixoto Coffee Roasters with her husband, Jeff Peters. The original location of Peixoto opened in downtown Chandler in 2015, but her family has been in the coffee trade for generations, cultivating the crop in the highlands of Minas Gerais, in Brazil’s coffee belt. Peixoto Peters roasts and serves coffee that her company imports directly from her family’s farm. Though each of Peixoto’s cafes is a little different — Chandler’s loca- tion is more rustic; Gilbert and Phoenix have a modern polish — they all have a hominess about them. They reflect the warm energy from Peixoto Peters, who’s always quick to offer a smile and a kind word carried by the soft lilt of her Brazilian accent. Getting beans from Brazil to Arizona is arduous. At the Peixoto family farm, harvesting starts around May and can continue into August, depending on the season. As workers pick gold- and rust- colored coffee cherries from the rows of trees planted neatly across the rugged land, Peixoto Peters hand-selects the best beans for the coming year. She tastes for rich flavors of dark chocolate and berries to make Peixoto’s Familia coffee, or sweeter notes for the roaster’s Honey coffee. Once she makes her selections, the shop waits two to four months while the beans are processed and shipped some 5,000 miles. This year’s order of about 40,000 pounds of coffee will fill three or four ship- ping containers. “It’s not for the faint of heart,” Peixoto Peters says. “We wouldn’t do it any other way, because it’s from our family. But it involves a lot more work, a lot more coordi- nation on our part to get these mountains of coffee from Brazil all the way here.” Reckoning with higher costs — at the farm, on transportation, on packaging and cups — Peixoto Peters increased the menu prices this past summer at her cafes in Chandler and Gilbert by 50 to 75 cents, or about 10%. When they raised the prices, Peixoto Peters and her husband shared a letter with customers to explain the higher costs their business faces. Her newest shop, which shares space with Chaconne Patisserie in downtown Phoenix, opened in September with the new prices. “I think it’s a matter of time for everyone in the marketplace to do so,” she says. “Every component of coffee is seeing a price increase.” Over the past two decades, Heltzel has built a network of relationships with farms in Guatemala, Colombia and Ethiopia that produce light-bodied coffees with fruit- forward flavors. He points to the Guatemalan beans mounded in a hopper on Moxie’s coffee bar, which are used for espresso drinks. Two years ago, Heltzel bought those beans for $4.10 per pound. Today, a pound costs $6.10, or 33% more. He hasn’t raised prices to match his higher costs — yet. You can still get a drip coffee for $3.50 or a latte for $5.25. Customers don’t get upcharged for trading dairy for almond or oat milk. “Coffee’s an attainable luxury, but only to a certain price point,” Heltzel says. “Then you price yourself out of the market, and then your business is over.” Moxie’s menu prices will increase by 25 to 50 cents per drink later this year. Heltzel has already increased retail prices on bags of coffee by around 5 to 10%. Raising those prices doesn’t feel good. “I didn’t design this to just be a place that only rich people come,” he says. PLANNING FOR TARIFFS Climate change is a slower, gradual problem than tariffs. But Trump has proven to be no less mercurial than patchy Amazon rains. He argues that tariffs encourage jobs and goods to be made on U.S. soil. Maybe that’s true in the case of certain goods. In the case of coffee, American-grown can’t begin to fill the demand. Only Hawaii, California and Puerto Rico have a climate to cultivate coffee. Together, those places grow just 1% of the world’s supply, far less than Americans drink. Americans gulp three cups of coffee each day, on average, though Arizonans drink less. While that’s still a bona fide caffeine addiction, the U.S. just ranks 25th in the world for coffee consumption. We can’t hold a candle to coffee drinkers in northern European and Scandinavian countries who knock back as many as five coffees a day. Coffee drinkers in the global north can get their fix only via international trade. Tariffs on coffee, then, pose a serious threat to business, at least for now. Trump signed an executive order in September that would designate coffee as a commodity that may be exempt from tariffs, following the logic that the United States can’t grow its own. Congress is also weighing a bill called the No Coffee Tax Act that would repeal tariffs on most coffee products and apply retroactively to duties since Jan. 19. And the Supreme Court in November will consider a case that questions the presi- dent’s ability to unilaterally impose tariffs at all. Until help arrives, coffee shop owners who would rather focus on brews and blends instead obsessively track global trade. Tariff red tape has forced roasters to contend with delayed and destroyed ship- ments. Heltzel says he paid a $700 duty on a box of coffee two days ahead of a deadline, only to receive an email from the shipping company that his package had been returned to sender. His tariff payment remains unac- counted for. “It’s kind of a nightmare to figure out who to get in contact with to get refunded or how do I get a refund? Are they refunding?” he says. “No one really knows.” Others are playing a game of chicken to keep costs low. Peixoto Peters says she can wait until the end of the year to import her annual batch of coffee from Brazil, on the chance that coffee tariffs ease soon. “The risk is high,” she says. “But I’m remaining optimistic that something like an exemption will be worked out.” Some roasters are making changes in real time. Blake Beal, who owns Phoenix’s Beal Beans Roasting Co. with his wife, Pashlee Grimmett, has dropped Brazilian beans from his coffee blends to avoid tariffs. He’s also moving away from Sumatran coffees because of high tariffs on Indonesian products. Much like a sommelier, Beal builds a list of pour-over coffee selections from a variety of roasts and regions. The lanky roaster, who sports curly hair and black-rimmed aviator glasses, is keen to tell the stories of the people who grow the beans as he delicately pours water over grounds at the warm wooden bar of his industrial Sunnyslope cafe. Beal used to roast and serve as many as nine different coffees. Today he focuses only on closer, lower-tariffed countries like Honduras and Guatemala and sources beans from small farms committed to sustainable and organic growing practices. The reality, he says, is coffee has been cheap for too long and hasn’t always fairly compensated the people who grow it. Higher prices reflect, in part, economic fairness. “I honestly wish coffee was more cheap,” Beal says. “But this is, in a lot of ways, what it should cost. That’s kind of a hard reality.” >> p 16 Julia Peixoto Peters, standing with her father, José Augusto Peixoto, will import about 40,000 pounds of coffee from her family farm. (Peixoto Coffee Roasters) The Peixoto family farm is located in the highlands of Minas Gerais, in Brazil’s coffee belt. (Peixoto Coffee Roasters)
