A bitter brew as trade war drives up coffee prices

Coffee is up 19 per cent—and global markets aren’t to blame. Ottawa’s political posturing is burning your wallet, one cup at a time

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Canadians are paying 19 per cent more for ground coffee this year—and it’s not because of global supply issues. It’s because of a self-inflicted policy mistake: a 25 per cent tariff imposed by Ottawa on imported coffee, a product Canada doesn’t even grow.

Many consumers may attribute the spike to global market volatility, especially after coffee futures soared to a record high of more than US$4.40 per pound in February. But that explanation no longer holds—futures have since dropped by more than 30 per cent, yet retail prices remain stubbornly high. So, what’s driving this divergence?

The answer lies, in part, in trade policy.

Since March 3, Canadian importers have been paying an additional 25 per cent tariff on imported coffee.

This counter-tariff, introduced as part of Ottawa’s retaliatory response to a trade dispute triggered by new United States duties on Canadian agricultural exports earlier this year, directly affects a product that isn’t even grown in Canada.

Unlike dairy or poultry, coffee has no domestic farming sector to protect. These tariffs aren’t shielding Canadian producers—they’re punishing Canadian consumers and businesses.

To grasp the scale of this impact, consider the size of the industry. According to Introspective Market Research, retail coffee sales in Canada total more than $2.7 billion annually and are projected to grow steadily over the next decade. Meanwhile, coffee shops and quick-service restaurants, from Tim Hortons to independent cafés, generate an additional $6.4 billion per year. Tim Hortons alone sells more than five million cups of coffee per day.

This is not a fringe sector; it’s a critical part of both our economy and our culture.

Ironically, the U.S.—our supposed trade adversary in this case—doesn’t grow coffee either. Yet both countries are now entangled in a tariff tug-of-war that serves no practical purpose. The same logic applies to tea, which is also subject to retaliatory measures.

The tariffs were introduced under the Trudeau government in a broader geopolitical strategy that often felt more performative than pragmatic. Trudeau’s combative approach to trade, seemingly crafted on a whiteboard without regard for economic fallout, may have resonated politically, but it ignored basic economic principles. Consumers were never part of the equation.

In contrast, Prime Minister Mark Carney appears to be taking a more measured approach. Tariffs on U.S. alcohol and citrus products remain, but those can be sourced from other markets with relatively little disruption. Coffee and tea, however, are a different matter. There are no alternative domestic sources. The cost of these tariffs is being passed directly to roasters, grocers, restaurants, and ultimately, to the consumer.

Compounding the problem is the volatility of American trade policy under U.S. President Donald Trump, which continues to inject uncertainty into food markets. Tariffs come and go with the political winds, forcing companies to engage in “buffer pricing.” Much like travellers buying insurance for unpredictable weather, companies build in extra costs to guard against political surprises. It’s effectively a tax on unpredictability, and it’s now embedded in the price Canadians pay at the till.

And while consumers might not feel the same pinch at their local café, where coffee is a smaller fraction of the total cost of a cup, the grocery aisle tells a different story. That’s where the full weight of these policies lands.

Whether a new trade agreement can be reached by the self-imposed July 21 deadline—or a damaging 35 per cent tariff Trump has set for August 1 can be avoided—remains uncertain. But what should be obvious is this: both Canada and the U.S. need to keep essential agri-food imports like coffee and tea out of their geopolitical fights.

Canada has a vibrant coffee ecosystem, built on roasting, innovation and consumer culture, not cultivation. There is no economic rationale for taxing it. Canadians shouldn’t be paying more for their morning brew just to send a symbolic message to Washington.

It’s time Ottawa led by example and scrapped these pointless tariffs.

Dr. Sylvain Charlebois is a Canadian professor and researcher in food distribution and policy. He is senior director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast. He is frequently cited in the media for his insights on food prices, agricultural trends, and the global food supply chain.