In 2022, a typical 12-ounce bag of coffee from Hector Carvajal’s specialty brand Don Carvajal Cafe cost about $17. Carvajal has had to increase prices to $20 per bag over the last few years, and now says tariffs might push him to charge a minimum of $25 per bag, or 25% more.
He’s one of many American business owners trying to walk the tightrope of increasing prices to help cover increased costs due to tariffs, while also attempting to avoid losing customers en masse.
On April 2, President Donald Trump rolled out his new plan for additional taxes on imports. On Wednesday, Trump pivoted, dropping his country-specific tariffs for the next 90 days while leaving a universal 10% rate in place for all trade partners except China, which jumped to a total of 145%.
“By the time a cup of coffee gets to somebody, it has already been through so many places,” says Carvajal, 28, the founder of Don Carvajal Cafe in Westchester, New York.
That’s because the vast majority of coffee sold in the U.S. is not grown in the States. Carvajal sources his coffee beans from the Dominican Republic, Colombia, Brazil and Costa Rica, so they’ll be subject to the 10% tax.
Adding these levies to imported goods “affects the farmers; it affects the customers; it affects the business owners,” he says.
“It’s tough for every single business owner,” Carvajal says. Those in the coffee industry have already felt the squeeze for several years due to the effects of climate change and supply constraints, according to NBC News reporting. “The timing of it all, it hits a little harder for us coffee people,” he says.
Adjusting to changing trade policy takes time, energy and resources for small businesses to adapt. “Here we are wasting a portion of our day explaining why there’s a price change” to customers, Carvajal says.
That said, explaining the reasons behind the price changes is key to keeping customers informed and, hopefully, loyal to the brand, Carvajal says. “No customer wants to pay more for something that they were paying less for last week,” he says.
Carvajal says he does his best to be fair in keeping prices steady for his customers. But that can mean taking a hit to his personal income and what he can reinvest. “It gets to a point where you just can’t do that anymore if you want to continue being in business,” he says.
For some businesses, the highest-quality goods are made overseas
Collars & Co., a men’s apparel brand based in Bethesda, Maryland, produces its clothing in factories around the world including in China, Pakistan, Colombia and Brazil.
Co-founder and CEO Justin Baer, 43, says he’s been preparing for potential tariffs since the U.S. presidential election in November. He’s been in contact with partner factories on how to share increased costs without passing them onto the customer: “We have tried to bring in as many goods as possible, as fast as possible, before the tariffs went into effect.”
“We have things on the water as we speak,” Baer says. “We’re definitely concerned and worried.”
It affects the farmers; it affects the customers; it affects the business owners.
Hector Carvajal
Founder of Don Carvajal Cafe
Baer says his priority is preserving his relationships with partnering factories overseas, as well as with customers. Collars & Co. brought in $40 million in sales in the last year, according to documents reviewed by CNBC Make It.
That means ensuring his company is able to maintain the high quality of their products, which Baer says benefit by being made overseas.
“I think it would take America and American clothing factories, which really don’t exist, many years and a tremendous amount of investment to create facilities that would even match anywhere close to what they’re doing overseas,” he says.
Only 2% of the clothing Americans buy is cut and sewn in the U.S., and about half of that is made for the military, according to reporting from The New York Times.
Overseas apparel workers “are absolute experts in clothing manufacturing, and they’re incredibly efficient,” Baer says, “and the quality is top notch.”
Will tariffs boost the U.S. economy?
During his confirmation hearing earlier this year, Treasury Secretary Scott Bessent laid out three goals of Trump’s tariff policy: making trade more fair and boosting U.S. manufacturing, raising revenue with U.S. importers paying more in taxes to the U.S. government, and using tariffs as leverage to negotiate with other countries.
In the short-term, the stock market has reacted sharply: In the four trading sessions following the announcement of new tariffs, the Dow lost more than 4,500 points, the S&P 500 sustained a 12% loss, and the Nasdaq Composite was down more than 13%, CNBC reported — losses not seen since the pandemic.
Stocks rose dramatically Wednesday after Trump announced a 90-day pause in some of the “reciprocal” tariffs. Then they fell again Thursday, giving back much of the gains from the historic rally.
Baer says he’s hopeful but unsure whether tariffs will ultimately improve the U.S. economy by generating revenue and creating more jobs.
After the presidential election, he and his business partners began looking into U.S.-based manufacturing companies, he says. They asked themselves: “Can we get the same luxurious quality here while delivering an attainable luxury price in the United States?”
Unfortunately, he says, “so far, the answer has been no.”
Can we get the same luxurious quality here while delivering an attainable luxury price in the United States? So far, the answer has been no.
Justin Baer
Founder and CEO of Collars & Co.
Carvajal is more concerned with the near-term outlook on how his business will survive higher costs of production.
“I just understand that I’m on the other side of the fence where now this is something that’s actually a problem for me,” he says, “because I have to find a way to make this make sense for me and my customers, and adjust the way we do business and the pricing.”
“I’m just trying to clear the smoke,” he says.
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