By Timothy S. Donahue
Top Takeaways:
- Rate jumps again: The U.S. base tariff under Section 122 has increased from 10% to 15%, affecting cigar imports.
- Temporary authority: Section 122 tariffs can last only 150 days without congressional approval, putting the new rates on a short clock.
- Import impact: The duty applies to declared import value, meaning future shipments — not existing inventory — will face the higher 15% rate.
It was 10 percent. Then it wasn’t. Now it’s 15 percent — at least for now.
One day after the Supreme Court of the United States ruled that President Donald Trump lacked authority under the International Emergency Economic Powers Act (IEEPA) to impose his April 2025 “Liberation Day” tariffs, Trump announced that he would raise the base tariff rate from 10 percent to 15 percent under a different statute — Section 122 of the Trade Act of 1974.
For the premium cigar industry, the shift has immediate implications.
Under the updated structure:
- Dominican Republic imports move from 10% to 15%.
- Honduras imports move from 10% to 15%.
- Nicaragua imports fall from 18% to 15%.
The move narrows tariff disparities among the three key cigar-producing nations, though for Dominican and Honduran imports it amounts to a 50% increase over the 10% rate companies had been paying.
Section 122 allows the president to impose temporary tariffs of up to 15 percent, but only for 150 days. After that window, congressional approval is required for the tariffs to remain in place.
The administration has not clarified what prompted the increase from 10 percent to 15 percent, despite initially signaling that the base rate would remain at 10 percent.
Unlike IEEPA, Section 122 has rarely been used in this way and is explicitly temporary in scope.
For importers, the tariff applies to the declared import value — not the wholesale or retail price — meaning the duty is calculated based on the company’s cost of goods. Products already in the United States have cleared customs at prior rates, so the higher tariff will apply only to future shipments.
Charlie Minato, co-founder of halfwheel, wrote that Tariff volatility over the past year has been significant. Rates affecting major trading partners have shifted repeatedly:
| Country | April 2, 2025 | April 9, 2025 | July 2025 | February 2026 |
|---|---|---|---|---|
| China | 34% | 125% | 51% | 30% |
| Costa Rica | 10% | 10% | 15% | 15% |
| Dominican Republic | 10% | 10% | 10% | 15% |
| European Union | 20% | 10% | 15% | 15% |
| Honduras | 10% | 10% | 10% | 15% |
| Nicaragua | 19% | 10% | 18% | 15% |
Whether the 15 percent level will hold remains uncertain. By early July, congressional approval would be required to extend the Section 122 tariffs beyond 150 days.
For now, cigar importers face a higher-duty environment — again — with another policy pivot potentially only months away.
