Most of the U.S. doesn’t have the climate to grow coffee, so ‘the only thing tariffs will do is increase the price,’ says a Wisconsin coffee company owner.
When Matt Raboin founded his hard cider company in Wisconsin eight years ago, he wanted to buy American.
But he soon found out that his needs as a small, upstart cidery couldn’t be met by any existing American bottle makers because his orders were too small. Forced to look overseas, Raboin, like many American small business owners and consumers, found the best bang for his buck in China.
Now, his vulnerable business model has been disrupted nearly overnight by President Donald Trump’s trade war with China, which escalated at a dizzying rate, giving business owners little time to adapt.
While it sources apples and almost all its other supplies locally, Brix Cider gets a vintage-style swing-top milk bottle from China for one of its new products. The product is a cream liqueur made with Wisconsin dairy, which explains why Raboin and his wife, Marie, wanted an old-fashioned milk bottle like ones that would have been delivered by the neighborhood milkman in the past.
Raboin explained that Brix Cider had to settle for a Chinese supplier because an American manufacturer he found can make a minimum order of 50,000 bottles — an unnecessary amount for a local business located in Mount Horeb, Wis. And because the Chinese supplier sold a quantity of bottles that Brix Cider could handle, that was the way to go.
But the cidery will only struggle because of the tariffs on China. Raboin expects his company’s costs to rise between $1 and $1.50 per bottle, leaving him no choice but to pass the increased price on to consumers.
While Trump allowed other countries a 90-day reprieve to allow for negotiation within just a few months of taking office, his administration ratcheted up tariffs on China to a whopping 145 percent, prompting Beijing to implement 125 percent tariffs on U.S. goods.
As the stock market — a point of pride for Trump during his first term — continues to falter, his surrogates have insisted that while there may be some short-term pain, his protectionist policies will remake the U.S. economy in a way that benefits American workers and businesses.
Raboin isn’t buying it.
“If this triggers a recession and more inflation, as it almost certainly will, then we’ll see a lot fewer customers going out to eat or using their expendable income buying our products,” he told National Review. “A deliberate global recession hurts everyone.”
A global recession could still occur, although the odds of one happening this year are lower now that Trump has lowered his retaliatory tariffs against countries that have a considerable trade surplus with the U.S. to the baseline 10 percent rate, rather than the top rates of 50 percent originally announced for those “worst offenders.” Goldman Sachs now estimates there is a 45 percent probability that the economy will fall into a recession over the next twelve months, retracting its previous recession forecast of 65 percent. Still, stock volatility saw its highest level since the 2008 recession.
Another Wisconsin-based small business, Wonderstate Coffee, is also bracing for the economic consequences that tariffs will bring to the already struggling coffee industry.
“This couldn’t be coming at a worse time for the coffee industry as a whole because the world commodity price for coffee is at an historic all-time high,” said TJ Semanchin, co-founder of Wonderstate Coffee.
The premium coffee roaster currently charges upward of $18 for a 10.5-ounce or a 250-gram bag on its website. With tariffs, the owner said, customers should expect to see a minimum 10 percent increase in what they will have to pay for his company’s coffee.
“I’ve been in the coffee business for 25 years,” Semanchin told NR. “Not once have I ever considered tariffs as a cost of doing business.”
Wonderstate Coffee imports its coffee primarily from Peru and Ethiopia in addition to Mexico, Colombia, Honduras, Kenya, and other countries with a warmer climate. There are very few coffee farms in the U.S., with the exception of those in Hawaii, California, and Puerto Rico, so the coffee industry relies heavily on international trade for its goods.
The Trump administration kept in place the base 10 percent tariff on every country from which Wonderstate Coffee receives imports. Even roasted coffee from Mexico faces a direct hit from tariffs, as it is noncompliant with the U.S.-Mexico-Canada Agreement.
The tariffs threaten the company’s ability to grow, pay its staff, and invest in new equipment, adding to the existing challenges of labor shortages and rising business costs that small businesses often face.
And since the North American climate precludes the possibility of ramping up domestic coffee production, the industry will bear all the short-term pain associated with the tariffs but will reap none of the theoretical long-term rewards.
“The only thing tariffs will do is increase the price,” Semanchin explains.
Describing the blanket tariffs as a “direct tax” on the consumer, he advocates an “immediate exception” of imported coffee and other agricultural products that cannot be grown domestically.
“These cost increases are real, and that’s going to hurt Main Street folks — business owners, their staff, customers, and just the general communities that they’re in — because that money is not going to anything productive. It’s just going toward tariffs,” said Shawn Phetteplace, national campaigns director at Main Street Alliance, a nonprofit dedicated to advocating for small business owners.
“Over 60 percent of Americans have some type of investment through retirement accounts or through other investments,” he added. “This idea that these policies are somehow supporting Main Street versus Wall Street is just political pandering and rhetoric and not backed up by the facts.”
There are, however, a select group of American businesses that are welcoming Trump’s tariffs with open arms.
While small businesses are struggling to adapt to the chaos caused by tariffs, an Ohio-based contract manufacturer specializing in American onshoring is set to benefit.
Velocity Group helps develop components for manufacturers in various sectors ranging from health care and medicine to aerospace and defense, producing plastic injection molds in the U.S. instead of outsourcing the production. The contract manufacturer already has the tools and assembly experience needed to relocate overseas operations to the U.S.
Although he does recognize the uncertainties and challenges that tariffs bring, Velocity Group CEO Kent Savage believes now is the perfect time to accelerate the shift toward onshoring in manufacturing – and his organization is at the forefront of it.
“I started onshoring more than a decade ago because I was concerned with the quality, the challenges of managing global supply chain problems, and costs. Even if you do it well, it’s expensive to do,” he said. “It was much harder to innovate at rapid speed when you’re dealing with the supply chain across the world. All of those factors together, for many companies, just makes all the sense in the world to be onshore.”
Nearly 70 percent of U.S. manufacturers have begun bringing their supply chains back to the U.S., with 94 percent reporting success in re-shoring, according to data compiled by Censuswide in 2024. This trend will only grow in the coming years amid economic and geopolitical instability.
However, not all manufacturers may be able to successfully re-shore if they require extensive manual labor. Higher labor costs and technological limitations would dissuade some industries from operating in the U.S., but other industries that leverage automation find re-shoring attractive. Those are the types of manufacturers with which Velocity Group collaborates.
For instance, one of Velocity Group’s new clients is a company that manufactures sensors for the purpose of railroad safety. Before it signed a contract with Velocity Group, the client outsourced its production to Mexico.
Savage went on to say that although he hopes the 90-day pause brings countries to the negotiating table with the U.S., its tariff battle with China most likely won’t get resolved in that time. Because China is one of the top three trading partners with the U.S., the trade tensions between Beijing and Washington will only make the global supply chain more volatile – especially in the transportation of products.
“The tariffs created uncertainty, and they’re going to create a tremendous disruption in the flow of goods and services,” the executive said. “There’s going to be a lot of volatility in the cost of transportation as things move in different patterns, in different ways, and that’s going to be an uncertainty and a cost.”
Savage said re-shoring eliminates the uncertainty and cost of transportation, as a fully domestic manufacturer decreases the risk of delivering supplies and exerts more control over all the components used in the final product.
“We understand that their success is our success,” he said of Velocity Group’s clients, “and together we can collaborate to get a better product more reliably and at the cost that they need it to be here, better than they can do offshore. That’s where we add value.”
Domestic manufacturing more broadly has been negatively impacted by the downstream effect of tariffs, with thousands of factory workers having been laid off so far. While Trump claims tariffs are meant to bring jobs back to the U.S., manufacturing workers are more convinced than not that tariffs will hurt their jobs and careers.
Ohio-based steelmaker Cleveland-Cliffs is one of the hardest hit companies, expected to face some 1,200 layoffs in the coming months following Trump’s tariffs on imported steel and cars. About 630 workers at two Minnesota mining operations and an additional 600 employees at a Michigan plant were given layoff notices late last month.
Cleveland-Cliffs executives blame “weak” U.S. automotive production as the driving factor for the layoffs, while arguing that Trump’s tariffs will work in their favor.
United Auto Workers President Shawn Fain has cheered Trump’s tariffs, arguing that they’ll help bring back American manufacturing and end the “free trade disaster that has devastated the working class communities for decades.”
So UAW Local 600 leaders were taken aback by the recently announced layoffs at Cleveland-Cliffs, which settled a labor contract with the Dearborn, Mich.-based union just last year. One of the union leaders described workers’ reactions to the news as “chaos.”