The Ripple Effect of U.S. Tariffs: Market Uncertainty and the Impact on African Restoration and Smallholder Livelihoods

On April 2nd, 2025—dubbed “Liberation Day” by President Donald Trump—the U.S. imposed sweeping tariffs aimed at strengthening U.S. industries and rebalancing trade. The immediate fallout has been severe, with global stock markets plummeting, and the U.S. dollar reaching a six-month low. Though a 90-day suspension of tariffs has offered temporary relief, the long-term effects on global trade, sustainable agriculture and farmer livelihoods, remain uncertain.

Tariffs Unpacked: What Do U.S. Tariffs Mean for MRTA’s Landscapes?

Tariff-driven market instability is threatening the growth and resilience of restoration-focused African agribusinesses. Over the past few years, Regeneration—through programmes like Markets Readiness Technical Assistance (MRTA)—has been working with African agribusinesses already integrating agroforestry and reforestation into their models, to scale commercially, expand restoration efforts and engage more smallholders. Yet with tight margins and growing trade uncertainty driven by tariffs, many of these businesses are increasingly exposed, straining their capacity to reinvest in smallholder livelihoods, restoration and climate resilience.

Whilst all of MRTA’s landscapes have been hard hit by the tariffs and the resulting market volatility, countries' exposure to tariff shocks varies based on factors such as their historic trade privileges. For example, the impact of tariffs has been especially pertinent in countries like Ghana, Kenya, and the Democratic Republic of the Congo (DRC), which previously benefited from duty-free access under the African Growth and Opportunity Act (AGOA). With AGOA set to expire in September 2025, concerns over long-term trade stability are growing.

The looming expiration of temporary tariff relief could usher in a more fragmented and unpredictable trade environment. Currently, all imports are subject to a flat 10% tariff, but this temporary reprieve expires on July 8th, opening the door for potential tariff adjustments. Future trade terms will likely vary, shaped by special agreements. Commodity-specific tariffs are also expected to evolve, as seen before the suspension—coffee and palm, for instance, are subject to a single tariff level, whereas cocoa faces more complex trade distortions due to multiple layers of processing fees.

A seedling nursey on one of MRTA’s RCs’ farms. Source: Regeneration.

Rising Costs Ahead: How U.S. Tariffs Impact Consumer Prices

While the global effects of U.S. tariffs remain unclear, one thing is likely—consumer prices in the U.S. are expected to rise. With the U.S. heavily reliant on imports for tropical commodities—such as cocoa and coffee, which aren’t typically grown in the U.S.—these tariffs are putting financial pressure on both buyers and suppliers. According to the Tax Foundation, the average American household could face an additional $2,100 in yearly expenses due to tariff-related price increases.

The impact is already visible across key commodities, with tariffs driving volatility in cocoa and coffee markets. In New York, cocoa bean futures prices in the U.S. surged by 5.8% in a single day, reaching their highest levels since February, while London prices dropped 4.9%. Meanwhile, coffee shop prices in the U.S. have already jumped up by 25%, with tariffs soaring by as much as 45% prior to the pause. As tariffs continue to reshape trade dynamics, consumers and businesses alike must brace for higher prices and economic shifts in the months ahead.

The Shift Away from Sustainability: Will U.S. Trade Lose its Appetite for Green Goods?

Rising costs are not only putting financial pressure on consumers, but are also reshaping consumer behaviour, making sustainably certified and specialty products less accessible. With economic downturns increasing price sensitivity, buyers are likely to shift toward lower-cost, non-certified goods. For suppliers in MRTA’s portfolio and the smallholders that underpin them, this trend presents a significant challenge: tighter margins, fewer financial incentives for environmentally responsible models and potentially, a shift back to conventional farming practices, which lack commitments to land restoration and traceability.

Regulatory hurdles are creating more bottlenecks for smallholders, further compounding the issue and threatening the future of sustainable trade. For instance, Ghanaian organic smallholders have faced roadblocks in recent months because COCOBOD—the regulatory body governing Ghanaian cocoa—must now be certified organic for organic cocoa to be shipped into the U.S., as per U.S. Department of Agriculture (USDA) regulation—something outside individual suppliers’ control. As these value-chain issues persist, sustainable trade risks being sidelined in favour of more conventional, less environmentally conscious production systems.

Cocoa pods growing on one of MRTA’s RC farms in Ghana, where sustainable agroforestry practices are deployed to nurture both crops and ecosystem. Source: Regeneration.

The Shift to Alternative Markets: How Tariffs Could Reshape Global Trade Flows

U.S. tariffs are reshaping consumer preferences and global trade flows, prompting suppliers to pivot toward alternative sustainable markets to the U.S.—most notably, the European Union (EU) is solidifying its position as a destination for certified sustainable commodities. Although the EU Deforestation Regulation (EUDR) presents some compliance challenges for smallholders, it nonetheless underscores the bloc’s commitment to ethical sourcing. Meanwhile, expanding trade agreements with Latin America and Africa are strengthening the EU’s global supply network.

East and Southeast Asia are also becoming strong markets for sustainably certified goods. In 2023, demand for organic avocados rose by 15% in China and Japan, driven by growing health awareness. Specialty coffee is also booming, with 11–15% CAGR expected through 2029, especially in China, Japan, and South Korea. Meanwhile, 53% of consumers—particularly in China—are willing to pay more for premium products like organic bean-to-bar chocolate.

As alternative markets for sustainable products emerge, we may also see new and emerging origins, as certain regions gain competitive advantages. Before the 90-day pause, key specialty coffee suppliers to the U.S. faced steep tariffs—for example, Colombia, which supplied 27% of U.S. green coffee in 2023, was set for a 25% rate. If these tariffs are reinstated post July 8th, it is likely that U.S. buyers will start to look to alternative origins like Kenya, the DRC and Rwanda—origins known for high-quality, sustainable and smallholder grown coffee—reshaping traditional trade flows in the specialty segment. Other commodity markets may experience similar shifts. For instance, Ghana’s 10% tariff could make its sustainable cocoa relatively more attractive for U.S. processors, while Côte d’Ivoire’s 21% tariff—if reinstated—could drive exports toward Europe and Asia. Mexican avocados, a staple in the U.S. diet, are another example; prior to the pause, they were subject to a 25% tariff, which could push buyers toward alternative suppliers like Kenya, where sufficient rainfall reduces reliance on irrigation and offers a competitive edge over many Latin American producers.

As trade routes adjust in response to evolving tariff structures, MRTA’s suppliers could gain new opportunities. The next phase of global trade will depend on how these policy shifts play out, shaping the future competitive landscape for emerging markets.

The Cost of Uncertainty: How Market Shocks Put Rural Sustainability at Risk

While the precise impacts of tariffs remain speculative, one outcome is clear: tariff uncertainty will amplify existing climate and cost pressures, fuelling instability across global supply chains. Already under stress from climate-related shocks, supply chains now face additional pressure as input and export costs climb. Arabica coffee prices, for instance—already being driven upward by poor harvests in Brazil and Colombia—could become even more erratic if tariffs revert to pre-suspension levels. This erodes agribusiness margins, undermines access to sustainability premiums, and further restricts reinvestment in, and financial incentives for, restoration.

In supply chains like macadamia, market uncertainty is already shifting supply chain behaviour, putting smallholders at increased risk. In early 2025, U.S. macadamia imports surged to $18 million as buyers rushed to secure stock ahead of expected tariff hikes. Yet by April, trade came to a halt amid confusion over the 90-day suspension window. For commodities where the U.S. is the primary export market—such as macadamia—the consequences are acute. Some agribusinesses have absorbed excess raw commodities they cannot sell, incurring significant losses. Others, wary of future volatility, are withdrawing from sourcing altogether—leaving smallholders with limited offtake options and increasing the risk they abandon agriculture in search of alternative livelihoods.

Macadamia nuts growing on one of MRTA’s RCs’ farms in Kenya. Source: Regeneration.

Meanwhile, investment flows into agribusinesses are slowing as tariff risks undermine financial stability. Many investors—particularly those in trade finance—are pausing engagement and diverting capital to more stable sectors like energy. As U.S. demand declines and orders dry up, agribusinesses may also find it increasingly difficult to service existing loans, triggering defaults, deteriorating credit, and subsequently limiting (and increasing the cost of) future borrowing. This financial pressure not only undermines commercial stability but also reduces reinvestment in community development and restoration.

These challenges are further intensified by rising production costs and shifting consumer preferences, which are eroding incentives for sustainable, production-protection approaches like agroforestry. In search of stability and lower overheads, some agribusinesses are turning back to extractive conventional models—less commercially volatile in the short term but far more damaging over time, accelerating soil degradation, biodiversity loss, and climate vulnerability, ultimately leading to lower and poorer quality harvests. Meanwhile, financial hardship is driving many smallholders toward side-selling, cross-border smuggling and other lucrative yet unsustainable practices—as they struggle to maintain their livelihoods.

A Call to Action: Prioritising Restoration and Livelihoods

Ensuring resilience in this uncertain trade environment demands urgent, coordinated action. As the world awaits tariff decisions beyond July 8th, growing market uncertainty continues to reshape global trade. While some suppliers may benefit from shifting dynamics, agribusinesses and smallholder farmers overall face mounting risks—with sustainability and livelihoods increasingly on the line.

• Buyers have a critical role to play in ensuring producers can uphold sustainable practices as incentives for sustainable certification decline amidst tariff uncertainty. By investing in certification, offering stability through long-term contracts, and maintaining transparent, clear terms, buyers help suppliers plan ahead, remain compliant and stay competitive in global markets. Their role goes beyond procurement—it’s about forging partnerships for sustainable and inclusive value chains.  

• Investors can help agribusinesses by leveraging their networks of partners, expanding trade finance tools beyond traditional markets (e.g., the E.U. and U.S.) and offering more flexible finance terms. Investors—especially concessional impact investors—can also make use of their technical assistance (TA) platforms to help suppliers strategically plan, build resilience, and ultimately, safeguard their investments.

• Donors and TA providers play a critical role in helping agribusinesses navigate market shocks and build long-term resilience. Donor-funded TA initiatives—such as Regeneration’s MRTA—enable suppliers to access business continuity planning, bespoke financial modelling, and strategic support to reposition themselves in volatile market conditions. Beyond direct support, donors are instrumental in de-risking early-stage solutions. By entering before concessional, commercial, or market-rate capital, they can pilot innovative approaches, demonstrate viability, and bring agribusinesses to a stage where they are investable for mainstream financiers. This catalytic role is essential to crowding in later-stage capital and enabling collective action to strengthen smallholder supply chains.

Ultimately, the future of sustainable agriculture hinges on inclusive, long-term partnerships amongst key stakeholders. If we respond with foresight and shared responsibility, we can turn uncertainty into a moment of regeneration—for people and planet alike.