While the Trump Administration is touting American exports and manufacturing, an unusual provision in the Big Beautiful Bill singles out one ag export for what amounts to a tax increase. Ray Starling, General Counsel of the North Carolina Chamber and a former Trump White House advisor, says tobacco is in the crosshairs.

“One that singles out tobacco, tobacco manufactured in the United States, singles it out essentially for a tax increase, even though the way that tax works on all other products that are manufactured here in the United States are all left alone or left intact.”

Starling says a law called the Duty Drawback refunds tariffs on products imported into the US which are subsequently exported.

“And the Duty Drawback helps with that, right? I mean, it is, it is essentially a waiver of a previously paid tax. And so with all that said, we hope that although it remained in the House version of the big, beautiful bill, that we can conceivably get it removed in the Senate version. And so we’ve certainly started those conversations.”

Starling says US tobacco manufacturers combine American tobacco with foreign leaf before entering the international market.

“You’re using import, blending that, in many cases, with it with domestic or American leaf, and then you’re putting that product back out on the international market. And so that’s why you’re paying a tax when that original product comes in here, but that’s why you get the credit when you push that product back out into the global market.”

As it reads now in the Big Beautiful Bill, the impact on tobacco growers could be significant. Starling uses North Carolina as an example.

“This could easily create an annual recurring hit of as much as $100 million and any way you cut it, that’s somewhere from a fourth to a fifth of the crop.”