In America the average coffee now costs more than the minimum wage

It's a quiet Sunday morning in Lansing, Michigan. The low autumn sun lights the interior of the Hob Nob cafe, illuminating a table of young regulars, including the flat cap-wearing Nicholas Kolacz.

He's just bought his weekly coffee.

"After a tip, because I always like to tip, it's $US10," Nicholas says.

That's $14.20 for one coffee.

"I used to come in here … probably three or four days a week. Now I come in once every Sunday because I don't have the money to spend," he says.

Nicholas makes $US17.50 per hour as a delivery driver. After rent and bills, there is no spare cash. 

He stopped buying beer long ago and looks at every discretionary purchase through the prism of his wage.

"When I do buy things, I look at like, 'oh, how many hours am I working to get this?'"

Once, America felt affordable. Now, the land of the free is also the home of the bill shock.

I felt it myself at a bagel cafe on New York's Upper West Side. 

Twenty years ago, when I lived in Manhattan, my regular breakfast was a bargain: coffee, orange juice and a bagel with lox for $US5. This week, at a no-frills diner, the same breakfast cost me $US31 ($44).

Tariff trauma hits businesses

The owner of the Hob Nob cafe in Lansing, Michigan, Trisha Kosloski, says her expenses have gone through the roof.

She estimates her delivery costs have increased 50 per cent as shippers pass on fuel costs.

But her biggest expense had nothing to do with petrol, or the US and Israel-led war with Iran. 

The price of coffee beans shot up just after Donald Trump was elected and announced a suite of tariffs on a number of nations where coffee is grown.

The average price of a cup of coffee in the US is now $US9.33 ($13).

"I'm an import business. We do not grow a lot of coffee in America, as much as we want to pretend that we do," Trisha says.

"When we saw those first round of tariffs, that were just like blanket tariffs when he first got into office, all of my coffees went up at least 30 per cent.

"After those tariffs were found unconstitutional, prices really didn't go down a lot."

In July US President Donald Trump announced 50 per cent tariffs on goods from Michigan's neighbour, Canada — which also hit the coffee industry.

"A large amount of the beans roasted in America … are actually roasted in Canada. So we had to pay those tariffs to get them," she says.

All the extra costs have put pressure on her business.

"There is no profit margin," she says.

"We just live on less and less and I have a second job and most of my staff at this point has a second job."

The hard-hit necessity

Coffee might be a discretionary purchase, but for many Americans there has been no way to avoid the most painful price increase. 

Petrol — or "gas" as it's known the US — is hovering at about $US4.30 per gallon ($6.10 for 3.8 litres), about $US1 more expensive than it averaged in 2025.

That is still cheaper than Australian prices, but Americans aren't used to paying anything like this.

Big cars are standard, and long journeys are unavoidable in sprawling mid-western communities like Lansing, Michigan.

The city is the home of the Michigan State University Spartans college football team, and for many, a lively Saturday morning tailgate begins before dawn.

The parking lots around Spartan Stadium are filled with gleaming, oversized SUVs and "trucks", like Ford F150s and Chevrolet Silverados.

"Gas is the number one thing that used to not be so much," MSU student Samson Sprague says.

"I don't know the last time I filled up my gas tank all the way. You know, it's always $US15, $US10. I never afford to do the whole thing at once anymore."

It's not only students feeling the pain. It's Parents' Weekend at MSU, where there are two and sometimes three generations of Americans here today.

"My daughter goes to University of Kentucky, so when we drive down to see her, gas is a lot more expensive. It's almost more reasonable to fly to Kentucky than drive to Kentucky right now because of the price of our gas," Michelle Krebill says.

Tara Lukaart is another struggling with the cost of filling up tanks. Her husband operates a plumbing business with several trucks on the road.

"For a small business to be able to afford that kind of increase in gas price has been a big deal," she says.

Elizabeth Madigan believes the current situation should lead to political change.

"I think that there is a desire to have a change and ... that the current situation, the current government is not acceptable," Ms Madigan told 7.30.

Another student, Olivia Schneider, lives at home. She has considered moving out with her partner but says the rising cost of living makes that unaffordable.

"Thinking about living with my boyfriend, it's honestly something that's not even realistic, simply for the fact that it is so expensive," she says.

"It's very hard to even think about having our own place where we have to not only pay for rent, but amenities, heating and cooling, gas and electricity and wi-fi and all of that. It's just simply not possible with how much we make."

Impacts on a battleground district

Lansing is in Michigan's Seventh Congressional District. It's a battleground held by a Republican incumbent, but cost of living concerns could tip it to the Democratic candidate, Will Lawrence.

That's if people are motivated to vote.

Michigan business owner Josh Mayo says he won't.

However, as a business leader who sells legal cannabis products, his costs have recently soared.

"My jars used to cost me anywhere from 16 to 20 cents and now they're 35 to 40 cents, 45 cents depending on the jar," Josh says.

"I use tubes to put the vaporisers in. Those used to be about 35 cents and they're about 55 to 65 cents. And then obviously shipping costs is added on top of that."

He says confusion caused by Mr Trump's spontaneous tariff announcements has also led to expensive equipment being seized at the border.

"My business can change overnight just because [of] a tweet or an email or a news conference," he says.

"There could be something happening with the war in Iran and then all of a sudden I can't get my product in, or gas prices ... or shipping costs go up and it can just happen instantaneously."

He says he understands the reasoning behind Mr Trump's tariffs but disagrees with how they have been introduced.

"I live in Michigan .. I was born in 1989, I watched the manufacturing industry disappear, I watched my friends' families lose their houses," he says.

"I watched … mass lay-offs in 2008.

"Do I think that we need to bring American manufacturing back and compete? Absolutely. 

"I think that's 100 per cent the way to do it, but I think the phased-in approach would have been smarter than just slap it on and for us all to just have to figure it out."

Watch 7.30, Mondays to Thursdays 7:30pm on ABC iview and ABC TV