The Future of Tea

This month's message carries a more somber tone than I usually like to impart in my communications. In early April the Trump Administration levied a 145% reciprocal tariff against China. The reason this is important to tea lovers is that China is the world’s top producer of tea (according to Worldostats).

Other top tea producing countries, in order of production rates (highest to lowest), include India, Kenya, Sri-Lanka, Turkey, and Vietnam. Though the growing regions of Assam and Darjeeling in India may be more well know than the growing regions of China, Indias tea production is less than half that of China's. Because China produces over half of the world’s tea (according to Worldostats) it will be impossible for United States to simply stop importing Chinese teas. According to World Tea News, "United States is the second-largest importer of tea globally. While small quantities of tea are grown domestically, it is not a crop grown at scale, and so the country depends on imports."

In other words, the U.S. cannot get enough tea from other sources, either by growing it domestically or importing from other countries, to meet consumer demands. Additionally, neither alternate sourcing nor domestic production “solutions” consider that China is the only country which produces all 6 types of tea (Dark, Black, Oolong, Yellow, White, Green), and that the tea produced there is unique to those areas. Terroir is as important to tea as it is to wine. For example, Longjing - commonly known as Dragonwell - is only authentic if it comes from the Chinese province of Zhejiang.

This means that tariffs on tea imports have the potential to significantly impact the tea industry. President of the Tea Association of the U.S.A., Inc., Peter Goggi, is quoted in World Tea News saying “This industry (along with coffee, cacao, and other agricultural products) should be exempt [from tariffs]. There is no infrastructure in place to produce these items in the U.S., and they are truly everyday necessities.”

The reasoning against tariffs on tea is clear:

• The domestic market for tea is too small to support the demands of the country.

• Chinese tea, like teas from all other countries, is unique to the area it is grown.

• Cost increases cannot be absorbed by the supply chain and will be passed along to consumers.

• Tea production is a highly specialized skill. Making specialty tea a craft product rather than a bulk commodity.

I, along with other tea professionals, have been waiting with anticipation to see what this will mean for the tea industry and our businesses. How tariffs will affect STEAP is yet to be determined. The import companies I work with are still determining their courses of action. Many are trying to mitigate cost increases by using existing stock and absorbing some of the tariff costs. I plan to hold off making any major decisions on product pricing until the import market comes to an equilibrium and I have a better understanding of trickle-down effects to my small business.

My hope is that you, my loyal customers, will not be affected by this state of limbo. I also want to be transparent there may be changes to what I am able to carry. I appreciate your support and understanding during this time of uncertainty.

Happy STEAPing,

Samantha

Chinese Tea Garden

Sources:

Worldostate -  worldostats.com

World Tea News - www.worldteanews.com – How Tariffs are affecting the tea industry

STIR coffee and tea magazine - stir-tea-coffee.com – Retaliatory tariffs add 25% to cost of imported tea