AGANORSA Leaf Announces Tariff Price Increase

Effective Monday, Aug. 18, there will be a 6 percent surcharge added to all AGANORSA Leaf orders.

The move is being done in response to the Trump administration’s tariffs, specifically the 18 percent tariff applied to imports from Nicaragua, which is where AGANORSA Leaf makes its cigars. Rather than changing the prices of its cigars, prices will remain the same, but when the order is processed, a 6 percent surcharge will be applied to the entire order.

While most companies have chosen to simply revise their price lists, Altadis U.S.A. and General Cigar Co.—two of the biggest companies in the industry—have gone with the surcharge approach. AGANORSA Leaf says that it spoke to its retail customers and found that they preferred this. The company says that if the tariffs are removed, the surcharge will be removed.

“Our retail partners are the cornerstone of our business,” said Terence Reilly, vp of sales and marketing, in a press release. “By clearly identifying the tariff as a separate line item, we can respond more nimbly to changes in trade policy while keeping our commitment to transparency and fairness. The change is meant to cover the additional increase to 18 percent on Nicaraguan cigars instituted earlier this month, as we have been absorbing the previous 10 percent tariff for the last four months.”

On April 2, President Donald Trump announced tariffs for products entering the U.S. from nearly every other country and territory. Originally, those tariffs would have been 19 percent for Nicaragua, while 10 percent for the Dominican Republic and Honduras. A week after the “Liberation Day” announcement, Trump announced that he had “suspended” some of the tariffs, reducing Nicaragua’s rate to 10 percent, though it was announced as a 90-day “suspension,” though it extended a bit longer. In late July, the White House unveiled the updated tariffs for dozens of countries, which increased Nicaragua’s rate back to 18 percent.

The tariff is applied to the “direct import price,” which is neither the wholesale price that retailers buy the cigars for nor the price that consumers pay for cigars. Unlike state tobacco taxes, which are calculated based on the wholesale price, the tariffs are baked into the wholesale price. Because of this, the tariffs won’t simply be passed onto consumers; consumers will likely end up paying at least, but oftentimes more than double whatever the increase is. In states with a percentage-based tobacco tax, that amount will increase too and the tariff-related price changes will also increase the sales tax paid.

On May 28, the U.S. Court of International Trade ruled that the Trump administration’s tariffs scheme was illegal, as the emergency justification the White House used to bypass Congress was ruled unconstitutional by the court. The court’s ruling is said to give the government 10 days to remove the tariffs. On May 29, the U.S. District Court for the District of Columbia also ruled against the government’s tariff scheme. Currently, both decisions are on hold while the government appeals.