The House-passed reconciliation bill contains a buried tax on tobacco, and President Donald Trump has endorsed the Senate’s ability to make changes to the mammoth legislation.
As Breitbart News catalogued, the House-passed “One, Big Beautiful Bill” would extend and enhance the Trump tax cuts, provide funds to secure the border, unleash energy development, slash spending, and much more.
While the legislation seeks to cut taxes for every American, it appears that there is one provision buried within the 1,100 pages of the One Big Beautiful Bill Act that would tax tobacco.
Donald Bryson, the CEO of the John Locke Foundation, wrote at the Carolina Journal:
Buried in the more than 1,100 pages of the “One Big Beautiful Bill Act” (HR 1), recently passed by the US House, is Section 112032, which strips tobacco of its eligibility under the drawback program. Since 1789, this program has refunded import duties on goods, or goods made from components, that are later exported. For US tobacco manufacturers, that means a refund on imported cigarette paper, filters, and other inputs if the finished products are sold overseas. Removing tobacco from the program amounts to a targeted tax increase on one of America’s most export-dependent farm sectors — penalizing North Carolina flue-cured tobacco growers simply for accessing global markets.
The results for the economy of North Carolina, which is home to over 800 tobacco farms, and for its tobacco industry, which produces roughly 200,000 jobs, could be devastating.
“In Wilson, Johnston, and Nash counties alone — North Carolina’s leading tobacco-growing regions — the loss of export incentives could shrink farm revenues by millions,” Bryson added. “Local economies that depend on tobacco-related activity for jobs and tax revenue would face a ripple effect, from trucking firms to small-town retail.”
The North Carolina Chamber has raised the alarm on this tax on tobacco as well.
The Chamber wrote:
President Trump himself campaigned on expanding the industrial base and manufacturing capacity of the United States and forcing countries that impose barriers to our exports to put the word “fair” back into “fair trade.” The duty drawback is one way to grow the volume of U.S. exports, address soaring trade deficits (which now exist even in agriculture), and to support industries that are reliant on foreign markets.
The Tobacco Growers Association of North Carolina said that the tobacco tax in the bill could could cost the industry $100 million every year.
The Chamber continued:
Just last year, research conducted for the NC Chamber’s “Our Ag Future” initiative found that tobacco still brings over $1 billion and 7,470 jobs to North Carolina’s economy. The duty drawback is the only remaining export promotion program that allows American tobacco farmers to compete in the global marketplace. Removing it would significantly pare that $1 billion economic contribution. I love the way the Executive Director of Tobacco Associates puts it in this statement: “Export growth is not just our future, it’s our present.”As the Senate now considers the One Big Beautiful Bill, Trump on Sunday night backed the ability of the Senate to make changes to the legislation.
“I want the Senate and the senators to make the changes they want. It will go back to the House and we’ll see if we can get them. In some cases, those changes may be something I’d agree with, to be honest. … I think they are going to have changes. Some will be minor, some will be fairly significant,” he said.
Senate Majority Leader John Thune (R-SD) has signaled that Senate Republicans want to make changes to the legislation.
“I’m a regular order guy. I think you can improve the product. But obviously,” Thune explained, “depending on what happens in the House and the timeline we have to work with, getting committees up and going and doing their thing takes a while — and how ready the product is for prime time… There are certain things the Senate wants to have its imprint on.”
Sean Moran is a policy reporter for Breitbart News. Follow him on X @SeanMoran3.
