“Unfair Dealings,” a recent report by Coffee Watch, addresses how tariff policies, tax evasion and the unequal structure of the international coffee trade perpetuate a cycle of poverty in producing countries.
Mexico, as an emblematic case, reflects how dependence on unequal markets exposes millions of coffee growers to economic and social vulnerabilities, condemned to poverty by tariff systems that reward raw material exports and punish local processing.
Now, with the escalation of the tariff war of the United States – through which it intends to impose tariffs ranging from 10% to 50% for countries such as Brazil, Mexico and Nicaragua – the structural policies that exploit and harm coffee growers are aggravated, according to the analysis.
With the tariffs implemented by the U.S., serious effects are foreseen for highly dependent countries, including Mexico, which exports 39% of its production to the U.S., and Nicaragua, with 50% of exports to North America, as well as the largest coffee producer at the global level, Brazil. “Trump’s new tariffs threaten to sink the economies of entire coffee-growing regions, such as Chiapas in Mexico,” the document stresses.
Last July 12, 2025, President Trump threatened to impose a 30% tariff on imports from Mexico, effective August 1, 2025. For its part, the application of tariffs to Nicaragua was announced since April and currently stands at 18%. “These two countries may find it difficult to quickly find alternative markets, which could have dire consequences for their already impoverished coffee growers,” analyzes the report on the countries it lists as “the big losers” in the coffee tariff war.
Structural Injustice
The organization asserts that the way in which world trade impoverishes coffee producing countries is and has been one of the main problems of the coffee sector. “The European Union, the United Kingdom and Japan have long stood out as the worst players in terms of coffee tariffs, and Switzerland is also somewhat problematic,” the report states.
This is because tariff systems, which it describes as unfair, have the effect of reducing income to coffee producing countries by penalizing value added while benefiting rich countries in the Global North. “Two interrelated dynamics – low value-added processing in producing countries and systematically lower export prices for the same products – together reinforce a global trading system that traps coffee-producing countries in a cycle of low returns and missed opportunities,” Coffee Watch details.
One fact exemplifies this contrast: almost all coffee exports, approximately 99% from producing countries are unprocessed; meanwhile, roasted coffee is exported at more than twice the value of unroasted beans. “Consequently, although coffee-producing countries are responsible for 74% of the volume of world coffee exports, they receive only 57% of the value of exports. Non-producing countries get significantly higher prices for their exports for all types of coffee.”
This is happening while coffee producing countries continue to bear the costs of supporting farmers in crises caused by droughts, floods, pests and other eventualities. “It is as if producing countries are climbing the Everest of poverty reduction while carrying a backpack full of rocks in the form of unfair tariffs and trade,” the paper illustrates.
Persistent Poverty Among Coffee Farmers
The report states that the majority of small coffee farmers and agricultural workers around the world live below the international poverty line, i.e. 5.5 million have incomes of just US$3.20 per day. Many even live below the extreme poverty line of US$2.15 per day.
On the other hand, studies show that Latin American coffee growers receive less than 60% of the export value of coffee, and the rest goes to transportation within the country, storage, processing and other non-agricultural expenses.
Even more telling is the estimate that farmers receive only 11.5% of the price consumers pay for a cup of coffee, and when input and labor costs are deducted from production, only 5.5% of that price remains as a gross margin for coffee farmers.
The top ten producing countries, each responsible for at least 2% of global production, had about 7.37 million smallholder coffee farmers in 2019. Of these, 39% (2.86 million) lived in poverty and another 21% (1.57 million) lived in extreme poverty.
Original text by Sare Frabes published in Avispa Midia on August 1st, 2025.
Translation by Schools for Chiapas.