This as-told-to essay is based on a conversation with 51-year-old TJ Semanchin, the co-owner of Wonderstate Coffee. Business Insider has confirmed Semanchin’s identity and role at the company. The piece has been edited for length and clarity.
I’ve been in the coffee business for the last 25 years. Before that, I was living in Latin America studying issues around sustainable development in coffee lands.
After moving to a small rural town in Wisconsin in 2005, my wife and I started what was Kickapoo Coffee at the time — we’ve since rebranded — with our business partner, Caleb Nichols. We’re a small company. We employ 85 people here in Wisconsin.
Today, Donald Trump’s tariffs are 10% across the board, and we’re in a business climate where there’s so much uncertainty. You can’t produce coffee in the United States. There’s no replacement.
As an industry, we were in denial when Trump was talking about tariffs last year or earlier. Even as we’ve gotten closer, we were like, “Well, of course, he’s going to make an exception.”
We thought we were likely immune, so this has been something that is so disruptive. Importing a product that can only be produced outside of our borders is at the core of our business.
The coffee industry was already in a shaky place
Courtesy of Wonderstate Coffee
The coffee market is getting zigzagged in every direction because there’s so much uncertainty and volatility in everything right now.
For the last six months, the coffee industry has been dealing with historically high commodity prices.
Over the course of a few years, the world’s largest producers of coffee, Brazil and Vietnam, have been hit with climate disruptions. It’s unprecedented. This affects everyone, from a roaster like us to huge brands like the Maxwell Houses and Starbucks.
So, there’s been a supply crunch, which has pushed the price up due to it just being harder for farmers to grow the beans.
It’s going to cost a lot
Courtesy of Wonderstate Coffee
We have coffee on the water right now that we think will be hit with tariffs.
Ethiopia is our biggest African source. In Central America, it’s Guatemala, and Peru is the main source in South America.
If I want to bring that coffee into the country and get it through customs, that tariff needs to be paid. I pay that.
We deal in containers, which are 40,000 pounds of coffee. At $5 per pound, I’d pay $200,000 for one container. If we start at 10%, the tariff would be $20,000. We buy about 14 containers a year.
So we’re looking at $250,000 to $300,000 of tariff impact. Some of that, no matter what, I have to absorb upfront. I have to finance it, I have to come up with the dollars.
I have to figure out how to afford that unexpected business cost. That means borrowing more money, which comes with interest, but it’s also tying up my cash.
What now?
We have 33 coffee shops here in Wisconsin, around the state. We’re in Whole Foods regionally, a bunch of Midwest grocery chains, and natural food cooperatives. We also sell to independent coffee shops, restaurants, and corporate campuses.
Tariffs are making me way more conservative in our outlook this year. We can’t afford to invest in our people, invest in equipment, or invest in growth. We’re pulling back on plans we had for this year.
We are working with the two sides of the coffee world: we’re working to empower farmers while providing consumers with some of the best coffees.
We have loyal customers, but as we increase prices, where and when do people stop drinking coffee or go somewhere else? The business environment is really dicey.
I don’t even know what the price of the bags that we put our coffee in is going to be. A lot of them come from Asia, and those tariffs are bouncing all over the place. Some come from China; some come from Taiwan.
I’ve talked to two of the elected officials and a senator from my state. I’m trying to make waves in Washington, DC. This is clearly going to slow our job growth.
Worst case scenario, we’re going to have to cut jobs.
