Ashton Increases Prices Due to Tariffs

Effective Monday, July 21, the prices of most Ashton cigars will be increasing due to tariffs.

“Due to the United States government’s newly imposed tariffs on imported goods, we are implementing a modest price increase on Ashton, La Aroma de Cuba, and San Cristobal cigars, as well as Ashton Pipe Tobacco,” said Sathya Levin, president and ceo of Ashton Distributors, Inc., in a letter to retailers. “In the spirit of fostering a healthy ecosystem built on brick & mortar wellness, we have decided to absorb the lion’s share of the cost burden resulting from the new tariffs.”

The company’s price increases vary by product:

• Ashton-branded cigars — 4.5 percent increase, which the company says is an average increase of 75 cents to the MSRPs
• La Aroma de Cuba & San Cristobal cigars — 3 percent increase, which the company says is an average increase of 30 cents to the MSRPs
• Premium House Selection — No Increase
• Savoy Humidors & Accessories — No Increase

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,” which was set to expire on July 9 but apparently has been extended for those three countries.

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.

Many companies have already paid tariffs on items that are in the U.S., which aren’t affected by the court rulings. Given the ever-changing and unpredictable nature of the tariffs to date, it’s unclear how many companies would revert back to pre-tariff prices in the near term, especially as the administration has appeals and other levers it could pull to enact tariffs. Most companies appear to have increased the prices, though some have simply left prices as they were and added a line item to invoices to account for the tariffs, arguing that it will be easier to revert prices if the tariffs go away.

Previously, halfwheel surveyed cigar companies and roughly half said they would increase prices if the tariffs remained in place.