The Border Adjustment Tax and the Coffee Industry
Update: The border adjustment provision was dropped from the tax reform proposal on July 28. Learn more.
One of the initiatives currently under discussion by the Trump administration is a “border adjustment tax” (BAT). This legislation has huge potential implications not only for the coffee sector, but for every coffee drinker in the U.S. – more than 180 million Americans.
In the case of coffee, a “border adjustment tax” could raise the price of everyone’s daily coffee, while not having the intended effect of “bringing jobs to America.”
Very generally, the so-called border adjustment is intended to encourage manufacturers to bring jobs back to the U.S. – but this wouldn’t work for coffee.
The overwhelming majority of coffee is already “manufactured” in the U.S. – i.e. cleaned, roasted, ground, packaged, and shipped. As demonstrated in the NCA Economic Impact report, coffee already contributes millions of jobs to the U.S. economy. And yet, since raw coffee is almost all imported to the U.S., for reasons having to do with climate and growing conditions, it could be subject to a border adjustment tax.
This could be a catastrophic – and unintended – consequence of the policy under discussion. It could not only increase the cost of America’s favorite beverage, but could very likely have a negative impact on jobs, the exact opposite of what was intended.