Ethiopia’s value-added coffee faces a 10% US tariff, threatening $2.7B export gains. The country eyes 20 new markets to offset losses.
Ethiopia’s $2.7B Coffee Sector Faces US Tariff Threat
Ethiopia’s globally renowned coffee industry, which earned $2.7 billion in the 2024/2025 fiscal year, is facing a potential setback as the United States prepares to impose a 10% tariff on value-added coffee products. These include roasted, ground, and packaged coffee exports.
The new tariff—announced on April 2, 2025, by US President Donald Trump—was initially set to take effect on April 9, but has since been delayed three times. It’s now expected to come into force on August 1, 2025.
Importantly, the tariff excludes raw, unroasted beans, which make up the majority of Ethiopia’s exports. However, the move directly threatens Addis Ababa’s efforts to expand its processed coffee exports, a key strategy to capture more value and increase foreign exchange earnings.
“The US tariff decision is affecting Ethiopia’s coffee export market system,” said Shafi Umer, Deputy Director General of the Ethiopian Coffee and Tea Authority (ECTA), in a statement last week.
“We are working to strengthen trade with existing partners and develop new markets.”
Why the US Market Matters
The United States is Ethiopia’s fourth-largest coffee buyer, accounting for 7% of the 5.63 million bags exported in 2023/24. This figure is projected to rise to 7.8 million bags—or 11.4% of exports—by the end of 2024/25, according to the US Department of Agriculture (USDA).
Although processed coffee represents a small portion of Ethiopia’s exports, it is growing quickly. In 2023/24, roasted coffee exports reached 27,000 bags (1,620 tonnes)—a notable increase from 1,120 tonnes in previous years. These value-added exports generated $4.2 million in revenue out of the $1.43 billion total coffee earnings that year.
The segment is also attracting investment. According to data from Selina Wamucii, investors have poured $10 million into building local roasting and packaging facilities aimed at boosting processed exports.
Ethiopia Faces Stiff Competition from Vietnam
The impending US tariff could erode Ethiopia’s ability to compete against Vietnam, which already dominates the global coffee market and benefits from duty-free access to the US under bilateral trade agreements. Vietnam also enjoys lower labor and production costs, giving it a pricing edge.
Ethiopia’s specialty coffee fetched between 270 and 290 cents per pound in mid-2024 and surged to 423 cents/lb in April 2025. However, these premium prices may not be enough to offset the 10% tariff or maintain profit margins in the US market—especially as global prices for other beans fluctuate between 151.95 and 258.84 cents/lb.
Addis Turns to Asia and the Middle East
To cushion the impact of the tariff and reduce reliance on the US, Ethiopia is accelerating efforts to diversify its export markets. In the 2025/2026 fiscal year, which began on July 8, the country is targeting 20 new markets, including China, Japan, Saudi Arabia, Germany, and Italy.
“The Ethiopian coffee export market system is under reform,” said ECTA’s Shafi Umer.
Some of these countries—such as China and South Korea—already buy Ethiopian coffee. However, the goal is to deepen trade through new logistics frameworks, market-specific strategies, and improved access to financing.
Experts note that while these ambitions are realistic, progress will require addressing logistical bottlenecks, negotiating bilateral trade deals, and mobilizing more investment—challenges that may delay gains.
Sector Remains Resilient—For Now
Despite the looming tariff, Ethiopia’s coffee industry continues to outperform expectations. The country exported 468,967 metric tons of coffee in 2024/25, exceeding the official volume target by 144% and revenue goals by 147%, according to the Ethiopian Coffee and Tea Authority.
The USDA forecasts continued growth for 2025/26, projecting exports to rise to 696,000 metric tons, thanks to improved farming practices, favorable weather, and strong international demand.
Still, Addis Ababa’s push to move up the coffee value chain—and secure a larger share of the global roasted coffee market—now hinges on how it navigates the new US tariff regime and opens up alternative markets.
