The U.S. is considering imposing new tariffs of up to 100% on imports from Nicaragua or revoking the country’s benefits under a free trade deal, the White House’s Office of the U.S. Trade Representative announced yesterday (October 20). According to Reuters, the report cites Nicaragua’s “abuses of labor rights, human rights and fundamental freedoms, and dismantling of rule of law” as creating a burden on U.S. commerce. Nicaragua and its President Daniel Ortega have faced international scrutiny for cracking down on dissidents, local journalists, and non-governmental organizations in recent years. The proposed tariffs stem from a “Section 301” unfair trade practices investigation initiated during the final days of the Biden administration, with President Trump set to make the final decision.
The proposed tariffs could have a significant impact on the cigar market, as Nicaragua is the largest exporter of handmade cigars to the United States. Currently, these cigars face an 18% tariff, but a 100% tariff would sharply raise costs for U.S. importers and consumers. According to Cigar Aficionado, industry analysts estimate the price increase could range from 50 cents to $1 per cigar, with higher increases in states with additional tobacco taxes. This could affect consumer demand and shift purchasing behavior, potentially slowing sales of Nicaraguan cigars in the U.S.
Cigar companies have indicated that current supply deals may remain unaffected in the short term, but price increases are likely once tariffs are implemented, according to Halfwheel. The industry is closely monitoring the situation as the public consultation period on the proposed tariffs concludes November 19, after which the final decision is expected.
