Economics Corner: New US Tariffs effect on US Cigar Prices

[MrBirdman]

  On 4/3/2025 at 7:05 AM, El Presidente said:

Temu and Shein ship combined 1 million packages a day the US. overall, 24 million packages globally airmail into the US every day. 

I am not saying it can't be done...but collecting duty tariffs on individual packages takes an infrastructure that currently isn't there. 

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Absolutely - that’s why I think it’ll take Congressional appropriation to actually implement. Now, spending money is one of the few things Congress can actually do these days so it’s not out of the question, but absent such action it’s not realistic. 

[VeguerosMAN]

I believe countries will quickly come to the table and make deals before the reality kicks in. Most won't be able to survive these tariffs as the US is still the biggest consumer. 

[Drguano]

This headline is making the internet buzz…

Trump’s tariffs hit even remote islands. One is mainly home to penguins.

[Cigar Surgeon]

  On 4/3/2025 at 8:16 AM, MagicalBikeRide said:

This was my understanding while watching, but you’re right, it was unclear.

Bigger picture - and ignoring the uncertainly around everything - I’m pretty sure that other countries will respond over the coming days. For example, I’d expect the EU to bounce this back at similar levels. Makes me think - how many NC cigar manufacturers distribute from the US? @El Presidente might know..? Say like Fab5 does - from factory to Florida and then distribution from there to the world. And will all players now look to find direct to market distribution routes as a way to mitigate? Or is that just impossible from some of the countries where the cigars are made? 

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A metric ton distribute from the US. Let me tell you my phone was pinging non-stop last night. And all of this a week before the largest tradeshow of the year.

Edit: Also turns out it's 19% / 29% - https://www.whitehouse.gov/wp-content/uploads/2025/04/Annex-I.pdf

[Cigar Surgeon]

I take it back, it's going to be 18.5% for Nicaragua. 

The country’s trade deficit divided by its exports to the United States times 1/2.   Imports from Nica 4.6bn, exports to Nica 2.9bn which is a 63% ratio, which gives us 37%, half it gets us 18.5%.

[MagicalBikeRide]

  On 4/3/2025 at 2:36 PM, Cigar Surgeon said:

 https://www.whitehouse.gov/wp-content/uploads/2025/04/Annex-I.pdf

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I’m not usually one to laugh at things like this, but for some reason, the format / visual appearance of that table has me in tears 😂

[BlueRidgeFly]

My somewhat naive view since I’m not an importer or retailer, an 18% tariff would be paid on the wholesale price, which is maybe 1/2 retail? So if the importer passes it through, a retail price increase of 9% would keep the unit profit unchanged for the seller. I’m ignoring the effect of the price increase on demand.

Maybe those in the supply chain will eat all or part of that at first. But soon enough our $10 cigars are going to cost ~$11?

[Chibearsv]

I don't know what MoFoh Robustos cost yesterday, I bought a bundle today to avoid a price increase. I hope I wasn't too late and beat Rob to the cigar shelf, I honestly don't know 😁. Kidding aside, no matter the increase, if the price is fair for the quality, I'll keep buying cigars. At some point, I may not deem a cigar worth its price, and then I'll stop. Right now, I've got some room to keep buying in the NC world but none in the CC world.

[JohnnyO]

  On 4/3/2025 at 7:05 AM, El Presidente said:

Temu and Shein ship combined 1 million packages a day the US. overall, 24 million packages globally airmail into the US every day. 

I am not saying it can't be done...but collecting duty tariffs on individual packages takes an infrastructure that currently isn't there. 

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All of those itsy bitsy packages go under the radar and dont pay duties. By US law, an individual in the US can receive up to 100 NC cigars through the mail without paying duties as long as they are labeled as "Gift". Over 100 it is considered a commercial quantity and requires a different license to process them. Don't know where the balance lies in paying duties or sending your packages from abroad. You would need to make it clear for your customers to take on the 100 cigars as this would reduce the cost of shipping per cigar. Mark Cuban has always said free shipping is the kiss of death. Sorry you're having to deal with this headache Prez, maybe set up a retail shop in Roatan? Oh, but that's another headache. John

[Cigar Surgeon]

  On 4/3/2025 at 5:57 PM, BlueRidgeFly said:

My somewhat naive view since I’m not an importer or retailer, an 18% tariff would be paid on the wholesale price, which is maybe 1/2 retail? So if the importer passes it through, a retail price increase of 9% would keep the unit profit unchanged for the seller. I’m ignoring the effect of the price increase on demand.

Maybe those in the supply chain will eat all or part of that at first. But soon enough our $10 cigars are going to cost ~$11?

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I did the pricing exercise with a manufacturer a couple days ago. A $10 retail cigar will see around $1.15 price increase in a no tax state. The market is going to lose its mind, because a 10 or 20 cent increase gets massive pushback. 

Edit: I'll add if you're getting your packaging from China, boxes for example, you're looking at a 55% tariff rate on the most expensive element.

[El Presidente]

From what I can see, online purchases into US will have the option of $25 USD flat fee next week which will rise to $50 USD July. This will be collected by the carrier who passes it on the US govt entity. 

 

[riderpride]

  On 4/4/2025 at 8:47 PM, El Presidente said:

From what I can see, online purchases into US will have the option of $25 USD flat fee next week which will rise to $50 USD July. This will be collected by the carrier who passes it on the US govt entity. 

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For clarity - the payable is on the end user?

Cheers!

[El Presidente]

  On 4/5/2025 at 3:34 AM, riderpride said:

For clarity - the payable is on the end user?

Cheers!

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Correct. Albeit it appears the retailer will collect and pass onto the courier service used who in term passes on monthly to US dept authorised. 

The courier will simply give the retailer a weekly/monthly bill. 

In the end the consumer pays.

[El Presidente]

Received a call at lunch from a China cigar insider. US companies shipping cigars to HK/China to be hit with 34% Tariff. 

Now I wouldn't think this will be a hard workaround...but still, plenty of US cigar companies who have been seeing great inroads into these markets  have some thinking to do.

[Gubbins]

Nicaragua -   18.5%

Do we have confirmation on:

-Honduras

-Dominican republic

And have either of these two not seen increases?

[El Presidente]

  On 4/5/2025 at 6:44 AM, Gubbins said:

Nicaragua -   18.5%

Do we have confirmation on:

-Honduras

-Dominican republic

And have either of these two not seen increases?

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Both are at 10%.

[Gubbins]

  On 4/5/2025 at 7:13 AM, El Presidente said:

Both are at 10%.

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Cheers Rob.

No increases there then. So we might expect increased sales on Honduran and Dominican cigars as Nicaraguan suffer increased costs on the consumer. Seems the logical outcome.  You would expect Nicaragua to come to the table soon and sort this out.

[El Presidente]

  On 4/5/2025 at 7:23 AM, Gubbins said:

  You would expect Nicaragua to come to the table soon and sort this out.

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Well 10% is an increased tax on Honduras and DR. They will eventually pass it on. Those countries on 10% globally generally are countries where the US has a trade surplus, not that it helped. 

US admin already has sanctions against Nicaragua. I suspect their path may be a little more challenging.

[Gubbins]

I’ve had a busy week at work so haven't had chance to catch up on the fine details, but it looks like 10% is the minimum increase being seen across the world, bar a few exceptions.  

Short term prices on nearly everything will be going up in the U.S, so it’s not like it’s only cigars. However Nicaraguan sticks will see a relative premium, which all things considered, you would assume would be good for Honduran and Dominican sales.

Be interesting to see the effect it has on Cuban cigar sales also.

[El Presidente]

  On 4/5/2025 at 9:08 AM, Gubbins said:

I’ve had a busy week at work so haven't had chance to catch up on the fine details, but it looks like 10% is the minimum increase being seen across the world, bar a few exception

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10% is the exception...most are far more. Swiss are 30%+ from memory.

Lets leave it a few days. Cuban prices outside the US won't change. US specific.

Online vendors of CC are largely at the mercy of couriers. It will take a few days/week for them to get their heads around it.

[JohnnyO]

  On 4/5/2025 at 7:23 AM, Gubbins said:

Cheers Rob.

No increases there then. So we might expect increased sales on Honduran and Dominican cigars as Nicaraguan suffer increased costs on the consumer. Seems the logical outcome.  You would expect Nicaragua to come to the table soon and sort this out.

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I don't see Nicaragua's willingness to work on this as they aren't willing to take back prisoners that have been deported by the US. John

[Puros Y Vino]

Cuba is probably not on that list I assume? Great time for Habanos to add its' own tariffs (i.e. price increases) since the NC competition is going to take a hit.

[sudoslash]

  On 4/7/2025 at 12:48 PM, Puros Y Vino said:

Cuba is probably not on that list I assume? Great time for Habanos to add its' own tariffs (i.e. price increases) since the NC competition is going to take a hit.

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Nope. If the U.S. was serious about reducing the deficit, they could start by letting me pay taxes on my CCs 😂

[Perla]

Taking this special offer to prep me up for what is in front of us. Only regret I didn’t buy more of it. 
 

[VeguerosMAN]

The EU has placed a 25% tariff on US tobacco, so I am guessing the prices will increase for NCs coming into Europe.