Tea 2025: What To Watch
1. TARIFFS
President-elect Trump has released multiple statements regarding tariffs being placed on ALL imports from ALL countries. It is important to keep in mind that extreme tactics like these are a part of the Trump playbook for negotiation. In September 2019, the Trump administration imposed a 15% tariff on a wide range of Chinese goods, including tea. The two nations met the following month and negotiated an agreement that reduced tariffs on Chinese goods (including tea) to 7.5% effective February 2020. The impact of these tariffs on Chinese tea imports to the US are foggy at best- US tea imports from China have generally declined since 2019, but COVID 19 shutdowns and supply chain disruptions make a significant contribution to those falling numbers. When comparing 2023 annual import volumes from China with 2024 volumes through Nov 2024, import volumes are up.
It is also worth noting, that from China’s perspective, the US imports about 0.5% of China’s total annual tea production. A recent quote on the subject helps put things in perspective:
“…these tariffs will hurt US tea businesses and tea consumers more than the tea industry in China. On the China side, their exports to the US are a drop in the bucket for them compared to their domestic consumption and other trade partners. On the US side, Chinese tea imports represent about 10% of total tea imports, 30% of all organic tea imports, and 30% of all green tea imports into the US. These include uniquely valuable specialty teas that are produced nowhere outside of China. This could be catastrophic for small and medium businesses that offer specialty tea- it will be similar to telling dedicated wine customers that their favorite French wines are no longer within their price range, and expecting them to be satisfied with Australian wines instead.”
If tariffs do go into effect for China and other nations, the overall volume of imports into the US may decline enough to noticeably increase ocean freight rates across the board. Prices of imported goods like tea thereby face pressures from tariffs and the impact of those tariffs on transport.
2. EU ORGANIC REGULATIONS AND ENFORCEMENT
This article (in Chinese) reports on the added controls that the EU is placing on organic tea imports from China. Although there is little media coverage on it, similar measures are being placed on Indian teas. The new regulations are in effect for 2025, and involve further testing/sampling, on-site inspections, and more detailed documentation. Some murmurings within the tea industry suggest that portions of India’s tea producers may have trouble complying with these new standards. If so, it remains to be seen how much Indian tea export volumes are affected. Will Indian tea exports to the EU decline while shifting to other destinations? Will a potential shortage in organic Indian black tea into the EU be (somewhat) substituted by organic African (or Sri Lankan) black tea? At this point, Firsd Tea’s colleagues in China do not foresee complications in China tea compliance with the new EU regulations.
WHAT’S NEXT?
Check back with Firsd Tea for updates on these developments and more:
info@firsdtea.com
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