Since April 2, 2025, the United States has introduced new customs duties on all imported products, upsetting the balance of the global cigar industry. While the official aim of this protectionist policy is to rebalance the US trade balance, it risks impacting supply chains, prices and the dynamics of the cigar market. This article examines the implications of these tax measures and explores possible scenarios for professionals and consumers.
New tariff regime for imported productss
The United States has announced the introduction of a customs duty of 10 % on all imported productsand specific surcharges for certain trading partners deemed "hostile" (up to 34 % for China, 20 % for the European Union, 31 % for Switzerland).
Since May 14, 2025surcharge of 34 % on Chinese products (including cigar accessories and packaging) is suspended until August 12, 2025 These products are now taxed at 10 % (base rate) during this period.
Customs tariffs apply to price'direct importThis is neither the wholesale price at which retailers purchase cigars, nor the price consumers pay for cigars. Unlike state tobacco taxes, which are calculated on the wholesale price, these tariffs are integrated upstream, amplifying their impact through successive margins, and resulting in an even greater increase in the price paid by the consumer.
On May 1ᵉʳ, 2025, U.S. Customs (CBP) announced the publication, by May 16, 2025A fact sheet, HTSUS procedures and reimbursement terms and conditions to facilitate implementation of the presidential decrees.
According to industry experts, the new tariffs could increase the price of each handmade cigar by as much as 0,50 à 2,10 $ in states without a tobacco tax, and even more so where such a tax applies. A box of 25 cigars could cost between €12.50 $ and 52.50 $ more.
Direct impact on major cigar suppliers
In 2024, the United States will be the world's leading market for handmade cigars, with 430 million imported cigars. Its three main suppliers are Nicaragua (253 million cigars), the Dominican Republic (106 million) and Honduras (67 million).
The new customs duties imposed on these countries (18% for Nicaragua, 10% for the Dominican Republic and Honduras) will have a immediate impact on prices.
An import-dependent industry
Handmade cigars are extremely dependent on imports. A cigar may be rolled in the Dominican Republic, using tobaccos from other regions, then packed in a box made in China and adorned with a ring printed in the Netherlands.
The increase in tariffs will thus have a overall impact on the industryaffecting not only cigars, but also accessories. In the United States, the market's dependence on imports is particularly notable, with approximately 90 % at 95 % premium cigars from abroad.
Scénarios devolution for the market worldwide
Despite the announcement of the new tariffs, their implementation remains unclear. In the past, similar tariffs have been quickly modified or suspended, making it impossible to know their impact on the industry over time, but only to envisage certain scenarios.
1. Rising prices and falling demand
Cost impact US importers and distributors, faced with an immediate increase in customs duties, are likely to raise their selling prices to absorb these taxes. This increase could be between 10 % and 34 % depending on the origin of the cigars, which would directly affect the compétitivits market for foreign cigars.
Some cigar manufacturers have already announced their intention to increase cigar prices. For example, JRE Tobacco Co. is planning an increase of 15 to 30 cents on the wholesale price of cigars, while Perdomo is considering an increase of 25 cents per cigar. According to a survey conducted by HalfwheelAbout half of the manufacturers surveyed said they would raise their prices if the tariffs remained in place.
"There is no doubt that the new tariffs will have a major effect on the premium cigar industry (...) If these tariffs remain in place, we expect tariffs to be repercutThis will lead to higher cigar prices in the long term, in line with tariffs. " Drew Newman of J.C. Newman Cigar Co.
Demand erosion : Rising prices of imported cigars in the U.S. could lead to a lower demand. While wealthy enthusiasts could absorb some of the increase, consumers sensitive to price rises could turn to cheaper alternatives or reduce their consumption.
2. Market segmentation and assemblye upmarket
Faced with tax pressure, manufacturers may opt for a premiumization strategy. In the USA, where premium cigars already account for a substantial share of the market, increased taxation could reinforce this trend. Wealthy consumers, who are less sensitive to price increases, would continue to buy premium products, while the entry-level cigar segment would undergo a "downturn". sharp decline.
3. Reshaping trade flows
Impact on the competitiveness of American cigars:
Countries with the highest tax increases could retaliate with taxes on American cigars, directly impacting the competitiveness of some manufacturers, such as J.C. Newman Cigar Co. and Tatuaje.
Canada already taxes U.S. cigars at 25 %, while the EU plans to subject U.S. cigars and tobacco products to an additional tariff of 25% if trade negotiations with the U.S. fail.
Delays in supply chains :
A prolonged trade war could destabilize supply chains and delay procurement. According to Halfwheel's survey, 12.5 % of companies surveyed have imported more products to prepare for possible stock-outs.
Diversification of export markets :
Cigar producers could redirect their exports to new markets. markets with more favorable tax treatmentEurope and Asia, to compensate for the loss of competitiveness in the US market. This reorientation towards other markets would alter global trade dynamics and could strengthen supply in certain marketsparticularly in Europe and China, where demand for premium cigars is strong.
What are the prospects?
The real impact of the new tariffs on the cigar market will depend on several factors:
- Visit duration of'application customs duties. Temporary suspensions have already been decided, but uncertainty remains high.
- Visit reactions from trading partnersThe EU in particular has announced retaliatory measures pending.
- The ability of companies to absorb or rehit costs and to adapt their offer to consumer responses.
Conclusion
The new US tariff policy acts as an exogenous shock to an already vulnerable global industry. While price rises seem inevitable, their repercussions on volumes, market structure and distribution channels will depend on the reactions of producers, importers, consumers and governments. In the short term, it will probably weaken entry-level cigars and supplier countries. In the medium term, it could accelerate a transition towards a more segmented industry, geared towards markets with stable taxation and high added value.
