By Timothy S. Donahue

Top Takeaways:

• Trade ruling: Federal trade court invalidates Trump’s 10% Section 122 tariffs
• Cigar impact: Dominican, Honduran and Nicaraguan cigar imports were affected
• Next phase: White House still pursuing possible Section 301 tobacco-related tariffs

A federal trade court has ruled the Trump administration’s current 10% tariffs illegal, introducing new uncertainty into trade costs for the premium cigar industry and the broader tobacco supply chain.

In a 2-1 decision, the U.S. Court of International Trade ruled that tariffs imposed under Section 122 of the Trade Act of 1974 exceeded the administration’s authority.

The Section 122 tariffs were implemented earlier this year after courts—including the Supreme Court of the United States—blocked the administration’s broader April 2025 “Liberation Day” tariff program.

The White House had attempted to use Section 122 as a temporary mechanism to impose tariffs without congressional approval under certain economic conditions. The court, however, found that the administration’s justification tied to trade imbalances did not satisfy the emergency conditions required by the statute.

For the premium cigar industry, the ruling directly affects tariffs on imports from major cigar-producing countries, including the Dominican Republic, Honduras, and Nicaragua. Those countries had been subject to 10% tariffs under the Section 122 framework.

The ruling stems from two lawsuits—one brought by businesses and the other by a coalition of states—that challenge the legality of the administration’s tariff actions. The Trump administration is widely expected to appeal.

Even so, uncertainty remains about what happens next because Section 122 tariffs were already set to expire on July 24 absent congressional intervention. The decision also arrives as the administration continues to build a separate tariff framework under Section 301 investigations conducted by the Office of the United States Trade Representative.

Those investigations focus in part on whether countries maintain adequate protections against forced labor and could form the basis for a new round of tariffs later this year.

All three major cigar-exporting countries—the Dominican Republic, Honduras, and Nicaragua—are also included in the Section 301 investigations. As part of the process, the administration completed a public comment period in April and held hearings later that month.

Cigar Rights of America said it testified at the hearings on behalf of the cigar industry. USTR has not yet announced the results of the investigations or formally advised the White House on potential tariff actions.

The Section 122 tariffs challenged in the current case are distinct from the approximately $166 billion collected under the broader April 2025 tariff initiative, which was previously blocked in court. Following the Supreme Court’s earlier ruling, the government established a process that allows importers to seek refunds for those earlier tariffs.

For cigar manufacturers, importers, and distributors, the latest court decision offers temporary relief but does little to eliminate the broader trade uncertainty hanging over the tobacco sector as Washington continues to explore new tariff mechanisms tied to international trade and labor enforcement policy.