Op-Ed: David Scott: How an unfair trade loophole hurts workers and taxpayers
In 2002, recognizing the need for jobs in economically depressed Grover, North Carolina, we founded Cheyenne International. We take pride in crafting high-quality, American-made tobacco products, employing hardworking people who value community and take pride in their work. However, a decades-old trade loophole threatens our business and the livelihoods of our dedicated employees.
The "double duty drawback" loophole allows foreign tobacco companies to receive an excise tax refund on exports without ever paying the tax in the first place. This benefit is exclusive to foreign tobacco companies; American consumers and tobacco companies, like ours, pay the full tax bill.
Cheyenne International would love nothing more than to receive the same advantage as massive multinational cigarette companies. Yet, as a small U.S.-based company, we lack international manufacturing facilities or the financial resources to build overseas factories solely to exploit this loophole.
This raises a critical question: As a company headquartered in Grover, North Carolina, employing 190 workers and supporting local causes like public education, family services, and veterans, why are we giving a leg up to massive foreign corporations while leaving American businesses to struggle?
President Donald Trump fought for fair trade by trying to close the “double drawback loophole” that allows foreign cigarette companies to rip off Americans for $12 billion over 10 years, according to the Congressional Budget Office.
The Courts overruled President Trump and said that Congress must be the ones to act to close the loophole. Yet it remains true that President Trump won our state in every election because he follows through on his promises to eliminate injustices.
The House has now taken up the mantle, successfully closing the loophole as part of President Trump’s “One Big Beautiful Bill.”
Yet our home-state Senator, Sen. Thom Tillis (R., N.C.), argues to keep this unfair loophole, claiming it benefits farmers. As a company that proudly purchases North Carolina-grown tobacco, we find this argument hollow.
Tobacco growers sell to both American and foreign tobacco companies at the same free-market prices. Farmers are not harmed by closing this loophole, as the demand for tobacco remains unchanged. This tax loophole isn’t a subsidy for farmers — it’s a taxpayer-funded giveaway to multinational cigarette manufacturers, padding their profits through an abusive loophole.
Because of Senator Tillis, the battle isn’t over. Foreign tobacco lobbyists are working overtime, pressuring him and others in the Senate to strip this provision from the bill and preserve their lucrative loophole. Their influence is a direct threat. We call on the Senate to stand firm and resist these special interests.
As a small U.S.-based company, we can’t compete with larger firms that exploit this advantage by setting up overseas operations, nor should we have to. All companies, regardless of size or location, deserve a level playing field. Lawmakers must act swiftly to repeal this policy. North Carolina workers, and all American workers, deserve a marketplace where their hard work isn’t undercut by unfair trade practices.
As a small tobacco company in the heart of tobacco country, we ask for commonsense to be heard and not play into the hands of big international corporations and support the elimination of duty drawback.
David Scott is the C.E.O. of The Team at Cheyenne International.