U.S. tariffs threaten Japanese matcha supply and prices

In Japan, the demand for matcha tea has surged, particularly in the United States, over recent years. As of 2024, a significant 78% of Japan's powdered green tea exports, which include matcha, were sent to the U.S., reflecting a growing trend referred to as the 'matcha boom.' However, this growth faces challenges due to proposed tariffs by the then-President Donald Trump, which may escalate from 15% to 25% on Japanese exports, raising concern among tea producers and retailers. In Nishio City, known for its high matcha production, exporters reported that approximately 30% of their revenue relies on the North American market. The tariffs could result in fewer exports to the U.S., impacting both prices and the availability of matcha for American consumers, alongside creating an uncertain environment for businesses dependent on this market. The rising prices of tencha, the raw tea leaves used in matcha production, have nearly doubled, primarily due to the increased global demand that has transformed matcha from a niche market into a widely appreciated beverage in cafés and restaurants across the U.S. Additionally, climate change presents another significant challenge to tea farmers, who can only yield a certain amount of tea per year. This harvesting cycle has been affected by fluctuating temperatures, resulting in reduced tea leaves this past season compared to the previous year. With the matcha demand still growing in parts of the U.S. that have yet to fully embrace it, Japanese farmers and buyers hope for a balance between managing tariffs and sustaining their production. The 'matcha boom' has brought some revitalization to the traditional tea industry, making it relevant to modern consumers, evidenced by the increase in foreign tourists visiting tea shops and cafés focused on innovative ways to present matcha. For example, modern establishments in Kyoto, such as Hatoya Ryoyousha Kiyomizu, blend historical tea-making elements with contemporary serving methods to enhance consumer experiences. Individuals in the industry, like Kanbayashi and others from Uji City, are keeping a close eye on policy changes, as they believe customer demand will ultimately dictate their business outcomes, regardless of potential tariff impacts. Overall, while the Japanese tea industry enjoys increased international interest, the looming tariffs and environmental challenges present significant concerns for matcha's future supply and its associated market dynamics. Stakeholders continuously assess the implications of these tariffs and how they could affect their livelihoods, hoping for a discerning and balanced approach to maintain the industry's growth in challenging times.