Time for a brew?
Date published:
By Tim Marsden, knowledge manager
Like many people, I enjoy a good cup of coffee. I have my go-to high street brand for a cup and a few favourites at home for the cafetière. I would not call myself a coffee snob. I just know what I like and what I do not.
Global trade has faced a few shake-ups recently, particularly around tariffs, and we have seen some creative ways of navigating them. Take Delta Airlines, for example. Rather than take delivery of a new Airbus A350 in the United States, which would trigger a significant tariff, they chose to launch its maiden commercial flight internationally. And it may continue flying overseas until it no longer counts as a new aircraft, potentially avoiding the import tax altogether.
Now, most of us will not be buying aircraft any time soon, but we do not often think twice about spending £3 or £4 on a tea or coffee. Yet behind each cup is a complex global supply chain shaped by climate, politics and environmental concerns. Brazil, the world’s largest coffee producer, suffered a severe drought last year. This has affected the current crop, which is expected to be around 4% smaller.
Unsurprisingly, coffee prices have surged. Arabica beans now cost over $3.60 per pound, the highest in decades, and the price of some well-known instant brands in the UK has increased by as much as 40% in a year.
Tea also tells a story of international trade, and the North East plays its part. The Port of Tyne handles around 40% of the UK’s raw tea imports, quietly connecting our region to markets around the world.
At the time of writing, the UK Government has announced a free trade agreement with India, set to become the UK’s third-largest after deals with Australia and Japan. Whilst the UK does import tea and coffee from India, the agreement goes much further. It includes tariff reductions across a wide range of goods and gives UK firms access to bid for around 40,000 public contracts in India, worth at least £38 billion annually across sectors such as healthcare, transport, life sciences and green energy.
I would be amiss not to acknowledge the new US-UK trade agreement, also announced last week. While the finer details are still emerging, it marks another important step in the UK’s evolving global trade strategy and will be watched closely.
We will be reviewing both deals to understand what they mean for businesses here in the North East. Our region is closely tied to international markets and has much to gain from these global opportunities.
At the Chamber, we are here to support your international ambitions, whether that is exporting goods, navigating new agreements or managing supply chains.
So next time you put the kettle on, take a moment to appreciate the global journey in your mug and the opportunities brewing for our region.