Towards the end of his presidency, the Obama Administration announced a series of new policies that aimed at improving the relations between the U.S. and Cuba [read more here]. In February 1962, President John F. Kennedy imposed an embargo impacting commercial, economic and financial interests between the U.S. and Cuba in response to actions taken by Cuba. While President Obama saw fit to attempt to reestablish diplomatic relations between the U.S. and Cuba, President Trump’s administration has responded with new rules to make business and travel between the two nations tougher and more restricted.
On April 17, 2019, at an event held in Coral Gables, Florida, National Security Adviser John Bolton announced that the Trump Administration would be rescinding several Obama-era policies toward Cuba. Among those changes would be restricting non-family travel to Cuba and limiting the amount of remittances a person in the U.S. can send to family in Cuba to just $1,000 per quarter. The U.S. is also expanding the Cuba Restrict List, which prohibits direct financial transactions with any entity with ties to Cuba’s military, intelligence, and security services. Secretary of Mike Pompeo, on the same day, announced that the Trump Administration would begin to allow Cubans who fled Fidel Castro’s regime to sue companies that have used their former property on the island.
“These new measures will help steer American dollars away from the Cuban regime, or its military and security services,” said Bolton during his speech at the event.
For now, it is unclear what these policy changes means for the tobacco industry and specifically the cigar product category. Halfhweel speculates that Imperial Brands, plc, could be named as a co-defendant in lawsuits by those who claim that cigar brands, tobacco fields, cigar factories or other property that was confiscated and is now being used by the Cuban tobacco monopoly [read more here]. While the true implications are unknown, it is clear that any sanctions and restrictive policies will only further deepen the divide and relations between the U.S. and Cuba going forward.
In addition to Cuba, the Trump Administration is also taking a harder stance on individuals in another popular tobacco and cigar country, Nicaragua. Bolton’s speech included the announcement that the Administration was imposing additional sanctions on Venezuela and Nicaragua, which is the location of many tobacco farms and factories. The Administration is imposing more penalties against Bancorp in Nicaragua, accusing it of being a “slush fund” for Nicaraguan president Daniel Ortega. Bancorp was previously sanctioned by the U.S. for its ties to Venezuela’s state-owned oil company. The U.S. is also imposing additional sanctions on Laureano Ortega, the son of Nicaragua’s President. In November 2018, President Trump issued an executive order that targeted Ortega’s government and its supporters, accusing all of allegedly engaging in corruption and human rights abuses, while also exploiting its citizens and public resources.