The crisis facing Guatemala’s coffee growers, suffering from rock-bottom commodity prices and depressed incomes, could turn into a nightmare as Donald Trump threatens tariffs against the country.
Trump last week said his administration is examining tariffs, remittance fees, and other sanctions after he said Guatemala backed out of an agreement to become a “safe third country” to slow the flow of undocumented migrants. U.S. companies, including Starbucks Corp., are the main buyers of coffee beans from the Latin American nation, according to data from Guatemala’s National Coffee Association, known as Anacafe. It’s the country’s most important agricultural export after bananas.
And while Trump’s threat comes amid his battle to reduce immigration, taking the action against Guatemala could end up producing the opposite result. The coffee crisis has already forced many of the nation’s small growers to leave the country and take the risky trip through Mexico to cross the U.S. border. Tariffs would likely further beat down the commodity market in the Central American country and possibly exacerbate the flow of migration.
While there’s no official information on the possible tariffs, “we are analyzing the possible scenarios,” Bernardo Solano, president of Anacafe, said by email. “As the United States is our main trading partner, if tariffs were increased, it would affect the competitiveness of our country.”
Coffee futures traded in New York have tumbled almost 25 percent in the past two years as supplies boomed in Brazil, the world’s top producer and exporter. Competition has gotten so fierce, and prices so low, that coffee farming has become untenable for many small growers — leading their adult children to shun the business. Guatemala has one of the highest inequality rates in Latin America, with some of the worst poverty, malnutrition and maternal-child mortality rates in the region, especially in rural and indigenous areas, according to the World Bank.
If Trump follows through on this threat, it “would aggravate the international price crisis that we are going through, further complicating the economy of the 125,000 Guatemalan coffee-producing families, who will be in need of finding other alternatives to generate income — among these, is migration," Solano said.
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