By MAX CONWAY, Rochester Institute of Technology and CEDAR ATTANASIO, Associated Press

ROCHESTER, N.Y. (AP) — With her purple-and-pink hair swaying, Reneé Colón stands on a stepladder in the rented corner of a warehouse, pouring Brazilian coffee beans into her groaning old roasting machine.

The beans are precious because they survived severe drought in a year when environmental conditions depressed coffee production globally, doubling the price of raw beans in just months.

Renee Colon, co-owner of Fuego Coffee Roasters, works at her roasting facility Friday, March 21, 2025, in Rochester, N.Y. (Max Conway via AP)

“Unfortunately, coffee is going to become more scarce,” said Colón, founder and roaster at Fuego Coffee Roasters. “Seeing that dramatic loss of the Brazilian crop is a perfect example.”

Losses from heat and drought have cut production forecasts in Brazil and Vietnam, the world’s largest coffee growers. Global production is still expected to increase, but not as much as commodity market investors had expected. That’s sent coffee prices up, largely because of continued high demand in Europe, the U.S., and China.

Prices peaked in February but have remained high, forcing roasters like Colón to weigh how much of that cost to absorb and how much to pass on to consumers.

Anderson Miller, left, and Claire Terrelli, right, make coffee at Fuego Coffee Roasters in Rochester, N.Y., Saturday, March 22, 2025. (Max Conway via AP)

The beans Colón was roasting cost her $5.50 per pound in early March, more than double what they cost in September. And that was for mixed, midrange beans. Specialty coffees — grown in delicate climates to slow growth and add flavor — can cost even more.

President Donald Trump’s current 10% tariffs cover most coffee-producing countries, including Brazil, Ethiopia and Colombia, and are expected to drive up costs for Americans. Amid his chaotic tariff pronouncements — at one point he threatened 46% tariffs on Vietnam imports and 32% on Indonesia imports before pausing them — American coffee roasters are rethinking their supply chains.

“With all these changes in coffee maybe we should open our own damn farm,” Colón muses.

Rural New York isn’t an option, of course. The world’s best coffee thrives near the equator, where seasons are long, and in high altitudes, where slow growing allows beans to gather flavor. But Puerto Rico, where Colón and her husband have roots, isn’t a serious option, either — labor costs are too high and she worries about the increasing risk of crop-damaging hurricanes.

She shrugs off buying coffee from Hawaii and California, which she says is either poor quality, overpriced or both.

In February, global coffee green exports were down 14.2% from a year earlier, according to the International Coffee Organization’s market report. The shortage led to the highest price ever for raw coffee in February, breaking the record set in 1977 when severe frost wiped out 70% of Brazil’s coffee plants.

Climate isn’t the only thing driving up prices, said Daria Whalen, a buyer for San Francisco-based Ritual Coffee Roasters. Inflation is driving up the cost of labor, fertilizers, and borrowing, she said.

A couple of espresso drinks sit on a counter at Fuego Coffee Roasters, Saturday, March 22, 2025, in Rochester, N.Y. (Max Conway via AP)

She described being in Mexico in April seeking to finalize contracts between Trump’s fits and starts on tariffs. It reminded her of being in Colombia a month earlier as Trump threatened and then backed away from tariffs that would have affected coffee prices.

“It was kind of like roller coaster day, because at the end of the day it didn’t exist,” Whalen said.

Some of the recent rise in coffee prices may be from importers buying extra in anticipation of the tariffs. Colón believes prices will go still higher as import taxes begin being paid. And with consumer confidence hitting a 12-year low, Colón could see a decrease in demand for her premium coffee.

“It is tough on our end because it drives the price up, tough on the consumer end because they have to pay more and tough on the farmers’ end because they may be experiencing really significant losses,” Colón said.

Yet she’s committed to expanding.

In December, she and her husband took out a $50,000 loan to buy a custom coffee roaster from Turkey that will triple capacity. They’re trying to increase sales by adding new wholesale clients like coffee shops, and selling directly to homes via a beans-of-the-month-style subscription service.

The Colóns have raised the wholesale price on a pound of roasted beans by 25 cents. They’re considering doing the same for pour-overs and espresso drinks at their two retail locations.

At one of those, called Melo, one couple said they don’t look at the coffee’s price on the receipt. For them, it’s a treat.

“We know we could go find coffee cheaper somewhere else,” said Rob Newell, a high school biology teacher, as he held a cooing infant daughter alongside his wife, who is also a teacher. “Maybe it’s just because we’re new parents, but you get, like, cabin fever staying in the house all day.”

Colón is also seeking to cut costs.

The warehouse where she roasts has some extra space, so she’s weighing stacking up more bags of raw beans there to save as much as $500 on monthly storage costs in port cities.

She’s tried to cultivate relationships with farmers to minimize price spikes and control bean quality. She described working with a farmer in Colombia as coffee prices were spiking in February to lock in a one-year contract that avoided the worst of the increase.

And like many small business owners, she’s had to get used to the complexity of tariffs.

In January, she turned down a pitch from a Montreal coffee importer who suggested the U.S. dollar’s strength in Canada would allow her to save money by importing through their warehouse. She feared that tariffs on Canada could increase prices. Plus, the coffee would have to cross an extra border, risking delays. And the value of the dollar has been up and down.

“I want things to be less complicated instead of more,” she said.

EDITOR’S NOTE: This story is a collaboration between Rochester Institute of Technology and The Associated Press.

The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.

By PAUL WISEMAN, Associated Press Economics Writer

The U.S. economy shrank at a 0.3% annual pace from January through March, first drop in three years. It was slowed by a surge in imports as companies in the United States tried to bring in foreign goods before President Donald Trump imposed massive tariffs.

The January-March expansion in gross domestic product — the nation’s output of goods and services — was down from 2.4% in the last three months of 2024. Imports shaved 5 percentage points off first-quarter growth. Consumer spending also slowed sharply. Federal government spending plunged 5.1%.

But business investment rose at a 21.9% clip as companies poured money into equipment. And a category within the GDP data that measures the economy’s underlying strength rose at a healthy 3% annual rate from January through March, up from 2.9% in the fourth quarter of 2024. This category includes consumer spending and private investment but excludes volatile items like exports, inventories and government spending.

Trump inherited a solid economy that had grown steadily despite high interest rates imposed by the Federal Reserve to fight inflation. His erratic trade policies — including 145% tariffs on China — have paralyzed businesses and threatened to raise prices and hurt consumers.

By PAUL WISEMAN, ANNE D’INNOCENZIO and CHRISTOPHER RUGABER, Associated Press Business Writers

WASHINGTON (AP) — American businesses are cancelling orders from China, postponing expansion plans and hunkering down to see what trade policy surprises President Donald Trump plans to spring on them next.

The president’s massive and unpredictable taxes on imports seem likely to mean emptier shelves and higher prices for American shoppers, perhaps within weeks.

And the higher costs and paralyzing uncertainty could exact an economic toll: U.S. consumers are in the biggest funk since COVID-19 hit five years ago, and economists say recession risks are climbing.

An early sign of the damage emerged on Wednesday when the Commerce Department released its first look at first-quarter economic growth.

The U.S. economy shrank 0.3% from January through March, the first drop in three years. Gross domestic product — the nation’s output of goods and services — was down from 2.4% in the last three months of 2024. Imports shaved 5 percentage points off first-quarter growth. Consumer spending also slowed sharply.

Asked how much of deterioration in the world’s biggest economy could be traced to Trump’s erratic policies, Boston College economist Brian Bethune said: “All of it.’’

As he promised on the campaign trail, Trump has upended decades of American trade policy. He’s been imposing — then sometimes suspending — big import taxes, or tariffs, on a wide range of targets. He’s currently plastered a 10% levy on products from almost every country in the world. He’s hit China — America’s third-biggest trading partner and second-biggest source of imported goods – with a staggering 145% tariff.

China has responded with retaliatory tariffs of its own – 125% on American products. The take-no-prisoners trade war between the world’s two biggest economies has shaken global financial markets and threatened to bring U.S.-China trade to a standstill.

Gene Seroka, executive director of the Port of Los Angeles, warned last Thursday within two weeks arrivals to the port “will drop by 35% as essentially all shipments out of China for major retailers and manufacturers has ceased.’’ Seroka added that cargo from Southeast Asia also “is much softer than normal with tariffs now in place.’’

After Trump announced expansive tariffs in early April, ocean container bookings from China to the United States dropped 60% — and stayed there, said Ryan Petersen, founder and CEO of Flexport, a San Francisco company that helps companies ship cargo around the world. With orders down, ocean carriers have reduced their capacity by cancelling 25% of their sailings, Flexport said.

Many companies tried to beat the clock by bringing in foreign goods before Trump’s tariffs took effect. In fact, that is a big reason that first-quarter economic growth is expected to come in so low: A surge in imports swelled the trade deficit, which weighs on growth.

By stockpiling goods ahead of the trade war, many companies “will be positioned to ride out this storm for a while,’’ said Judah Levine, research director at the global freight-booking platform Freightos. “But at a certain point, inventories will run down.’’

In the next few weeks, Levine said, “you could start seeing shortages … it’s likely to be concentrated in categories where the U.S. is heavily dependent on Chinese manufacturing and there aren’t a lot of alternatives and certainly quick alternatives.’’ Among them: furniture, baby products and plastic goods, including toys.

Jay Foreman, CEO of toymaker Basic Fun, said he paused shipments of Tonka trucks, Care Bears and other toys from China after Trump’s tariff plan was announced in early April. Now, he’s hoping to get by for a few months on inventory he’s stockpiled.

“Consumers will find Basic Fun toys in stores for a month or two but very quickly we will be out of stock and stock product will disappear from store shelves, ” he said.

Kevin Brusky, who owns APE Games, a small tabletop game publisher in St. Louis, has about 7,000 copies of three different games sitting in a warehouse in China. The tariff bill of about $25,000 would wipe out his profit on the games, so he is launching a Kickstarter campaign next week to help defray the cost of the duties.

Still, his sales representative is urging him to import the games if possible, because he expects that retailers will soon be desperate for products to sell. If he does import the games, Brusky is considering raising its price from $40 to at least $45.

Worried that tariffs will push up prices and drive away customer, retailers have put expansion plans on hold for next year, said Naveen Jaggi, president of retail advisory services in the Americas for real-estate firm JLL. “What they are telling us is: ‘We want to slow down the decision to open up stores and commit to leases’ because they want to watch how the consumer reacts.’’

Consumers already seem to be freaking out. The Conference Board, a business group, reported Tuesday that Americans’ confidence in the economy fell for the fifth straight month to the lowest level since the onset of the COVID-19 pandemic. Nearly one-third of consumers expect hiring to slow in the coming months, nearly matching the level reached in April 2009, when the economy was mired in the Great Recession.

Consumer spending accounts for about 70% of U.S. GDP so if nervous consumers stop shopping, the economic fallout could get ugly. Economist Joseph Brusuelas of the consultancy RSM pegs the probability of a recession within the next 12 months at 55%.

Even gloomier is Torsten Slok, chief economist at Apollo Global Management. He sees a 90% chance of a recession by this summer if Trump’s tariffs remain in place. Businesses are already planning on significant disruptions, particularly from the 145% duties on goods from China, he said.

“You see that in company reactions: Orders are down, (spending) plans are down, costs are up, prices paid are up,” he said.

He expects large layoffs by trucking firms and retailers as soon as late May, as the slowdown in goods coming into U.S. ports from China works its way through the supply chain.

Flexport CEO Petersen said shortages of products are “not a tragedy.”

“It’s going to be much more about the layoffs that follow,” Petersen said. “That’s where the real pain is going to be felt. Shortages mean companies aren’t selling stuff and therefore don’t have the profits that they need to pay their workers.’’

He said the stakes are so high that he expects the U.S. and China to deescalate their trade war and bring down the tariffs. In fact, Trump and his advisers have sounded more conciliatory lately. Treasury Secretary Scott Bessent, for example, said that the triple-digit tariffs the U.S. and China have slapped on each other are not sustainable.

But more abrupt shifts in trade policy risk increasing the uncertainty that has paralyzed businesses and worried consumers.

Moreover, said economist Cory Stahle of the Indeed Hiring Lab, “conditions may worsen in the coming months if people start behaving like they are in a recession. Softening some of the recent trade policy changes may ease some business concerns, but it may already be too late.’’

D’Innocenzio reported from New York

By ELAINE KURTENBACH, Associated Press Business Writer

World shares were mixed on Wednesday as strong corporate profits were offset by uncertainty over President Donald Trump’s trade war.

The Eurozone logged 0.4% growth in the first quarter of the year, stronger than in the last quarter of 2024. But the outlook has been dimmed by higher tariffs on exports from the 20-nation region using the euro.

Germany’s DAX gained 0.4% to 22,531.16 after the country’s center-left Social Democrats voted to approve a coalition agreement. The vote’s results announced Wednesday pave the way to elect Friedrich Merz as the new German chancellor.

In Paris, the CAC 40 also rose 0.4%, to 7,586.37, while Britain’s FTSE 100 was little changed at 8,465.95.

The future for the S&P 500 edged 0.1% lower while that for the Dow Jones Industrial Average was up 0.1%.

In Asian trading, Tokyo’s Nikkei 225 index climbed 0.6% to 36,045.38.

Japanese automakers’ shares were mixed even after Trump signed an order relaxing some U.S. tariffs on imports of autos and auto parts.

Shares in Toyota Motor Corp. lost 1.6% while Honda Motor Co. gained 0.4%. Nissan Motor Co. lost 0.2%.

In Hong Kong, the Hang Seng rose 0.5% to 22,119.41, while the Shanghai Composite index slipped 0.2% to 3,279.03 as surveys showed export orders to Chinese manufacturers declined in April as higher U.S. tariffs on goods from China began to take effect.

South Korea’s Kospi dropped 0.3% to 2,556.61, while the S&P/ASX 200 in Australia surged 0.7% to 8,126.20.

On Tuesday, the S&P 500 climbed 0.6% and the Dow industrials added 0.7%. The Nasdaq composite rose 0.5%.

CEOs say they’re unsure how long their companies can keep piling up profits due to the lack of clarity about Donald Trump’s trade war.

Honeywell International helped lead the market with a gain of 5.4% after reporting stronger profit and revenue for the latest quarter than analysts expected. It also raised its forecast for profit over the full year.

Sherwin-Williams rose 4.8% for another one of the market’s bigger gains after the paint and coatings company likewise reported a better-than-expected profit.

UPS stock swung between losses and gains at the day’s start of trading after it reported a stronger profit than analysts expected for the first three months of 2025. Because it’s the world’s largest package delivery company, UPS can offer a window into how the global economy is doing.

But UPS also said it wasn’t updating its financial forecasts previously given for 2025 because of “the current macro-economic uncertainty.” It also said it expects to cut about 20,000 jobs and close 73 buildings this year. Its stock finished 0.4% lower.

Investors fear Trump’s tariffs could bring a recession if left unaltered because they could freeze global trade and send prices higher for all kinds of products.

U.S. households are getting much more pessimistic because of tariffs, and a report from the Conference Board on Tuesday said their expectations for income, business and job market conditions dropped to the lowest level since 2011 and are well below the level that usually signals a recession ahead.

General Motors slipped 0.6% despite reporting a stronger profit for the latest quarter than analysts expected. The company rescheduled a conference call with investors to discuss its results and forecasts for 2025 to Thursday because of “recent reports regarding updates to trade policy.”

Coca-Cola also overcame an early drop to rise 0.8%. The beverage giant reported better-than-expected earnings in the first quarter and said the impact of tariffs on its business are likely to be “manageable.”

Treasury yields fell. The yield on the 10-year Treasury dropped to 4.17% from 4.23% late Monday.

In other dealings early Wednesday, U.S. benchmark crude oil lost 68 cents to $59.74 per barrel. Brent crude, the international standard, shed 64 cents to $62.64 per barrel.

The U.S. dollar rose to 142.98 Japanese yen from 142.35 yen. The euro fell to $1.1371 from $1.1386.