When President Donald Trump announced the United States’ new tariff policy on April 2, many tobacco enthusiasts wondered how the premium cigar industry would react. A casual poll by Halfwheel said half the cigar manufacturers were going to raise prices due to the tariffs, but for more than a month, they took a wait-and-see approach to see what their competitors did. It seems the first domino fell April 29, when Perdomo became the first cigar company to up its prices, 25 cents per cigar, because of the tariffs.
On April 30, both CLE Cigar Co. and RoMa Craft Tobac announced price increases effective May 5 due to tariffs, according to Halfwheel.
CLE Cigar Co. said cigars up to 52 ring gauge will increase 20 cents on the wholesale price, while cigars 54 ring gauge and larger will increase 30 cents.
“We have to increase prices starting Monday, May 5th,” said Christian Eiroa, the company’s founder, in a letter to retailers. “We have waited as long as we could, optimistic that the tariffs would be reversed, but no such luck.”
Skip Martin, co-founder of RoMa Craft Tobac, said the increases will typically be less than 5%, but there are some SKUs that are increasing by more than 10%.
“As the tariffs are assessed on our import price, and not on our wholesale price, the impact varies based on how much margin we have built into our wholesale prices,” said Martin. “In most cases, we are absorbing some of the tariffs and not passing them on to the retailer, knowing that the retailer will keystone any increase we pass onto them, doubling the impact on our consumers. Given our more generous margins on LEs, these are generally affected the least. Given our very tight margins on Maestranza, this brand is affected the most severely.”
Martin also said that if the tariffs were removed, RoMa Craft would not lower prices. This, according to Halfwheel, is likely to be the strategy that most cigar companies take.
“Should the unlikely reversal of the tariffs occur, we will not reduce our prices as this would only devalue our retailer’s inventory. It would delay any future price increase and could possibly allow us to do more in terms of discounts and free goods to support our retailers’ ability to drive sales of our brands.”
