The Cigar Association of America (CAA) President Scott Pearce testified yesterday before the Section 301 Committee, an interagency group including the Office of the U.S. Trade Representative (USTR), the Department of Commerce, the Department of the Treasury, the Department of Labor, and other agencies that assess the impact of trade policy. This was the final public hearing on the proposed tariff schedule, which would set a 12.5% rate for most cigar-producing countries.
Pearce’s message to the Committee was direct: cigars belong in Annex A, the exemption reserved for products that would cause economy-wide disruption, cannot be produced domestically at scale, or where tariffs would not move the needle on the underlying problem. CAA’s testimony emphasized that the Administration has already established a precedent for exemption, and that the cigar industry clearly meets that criteria.
Pearce made the case on four points:
Tariffs will not bring cigar production back to the U.S.
Americans purchased nearly 10 billion cigars in 2025, and about 80 percent were imported, roughly 99 percent of large cigars. Honduras, the Dominican Republic, and Nicaragua produce over 98 percent of cigars sold in the U.S., based on tobacco varietals and hand-rolling expertise unique to those countries. Tariffs would raise prices without shifting a single job home.
Cigars are not meaningful leverage in these trade relationships.
The U.S. already runs a trade surplus with the Dominican Republic and Honduras, and Nicaragua is already subject to a separate, targeted Section 301 action that recently concluded, determining that goods qualifying under the DR-CAFTA trade agreement, including cigars, would be exempt.
Cigar tariffs would fall hardest on American businesses, farmers, and tax revenues.
Higher prices mean fewer cigars sold, shrinking the more than $800 million a year CAA members pay in federal excise taxes, plus state revenues. Fewer sales also hurt U.S. tobacco farmers, who export about $170 million a year in cigar leaf, and more than 3,500 Main Street tobacconists, 83 percent of them single-store, family-run businesses employing roughly 50,000 people.
Excluding cigars advances the Administration’s own goals.
U.S.-owned cigar operations abroad pay above local market wages, follow the law, and provide benefits well beyond what is required. These are the companies getting it right, not the ones this action is meant to address.
