The tobacco sector is impacted by tariffs due to the higher costs for imported tobacco products such as cigars and other products. President Trump's recent tariffs imposed a 10% baseline rate on imports from countries like the Dominican Republic and Honduras, while Nicaragua faces an 18% tariff. 

In general, higher tariff-related costs have been successfully passed on to consumers through price increases for products like cigars and accessories, which has left the tobacco giants relatively unscathed. Reports indicate that may be the case with the most recent tariff actions by the U.S., as higher prices on tobacco products in the U.S. will reportedly be seen within weeks.

Looking further ahead, analysts have warned that companies importing raw tobacco or finished products that face increased operational tariff-related expenses could reach a limit in passing on the extra costs to consumers and see demand trickle lower. 

Over the last six weeks, Philip Morris International (NYSE:PM) scratched out a 0.3% gain and Imperial Brands (OTCQX:IMBBY) is 1.8% higher, while Altria (NYSE:MO) is down 2.8% and British American Tobacco (NYSE:BTI) is 1.1% lower. All four tobacco stocks have outperformed the broad market as investors have sought out defensive consumer staples favorites.