Tobacco Stocks Struggle As Tariff Easing Put Out Rally

Topline Left out of the recent stock market rebound as the U.S. and China took a step back in their trade war were big tobacco stocks, though American cigarette and tobacco companies remain a safe bet against tariff-driven shakiness and recession agita. Zyn maker Philip Morris International has not taken part in this week’s stock rally. Key Facts Shares of the world’s three most valuable tobacco companies – Zyn nicotine pouch parent Philip Morris International, Marlboro’s U.S. rights holder Altria and Camel and Newport cigarette maker British American Tobacco – all declined Tuesday, furthering a recent slump for the sector as the broader U.S. market roared following a pause on the most severe tariffs between Beijing and Washington. Philip Morris and Altria stocks each declined more than 0.6% Tuesday, extending their decline over the last week to 6% apiece, while New York-listed shares of British American Tobacco dropped 0.7% to widen its weekly pullback to 9%. The S&P 500 benchmark rose almost 1% Tuesday and is up 5% over the last week, far better than the smoking giants. Altria and Philip Morris both rank among the S&P’s worst 25 performers over the last seven days, according to FactSet data. The London-based British American Tobacco is not an S&P constituent, but it would be the index’s fifth-worst performer. Why Are Tobacco Stocks Down? Altria, British American Tobacco and Philip Morris belong to a broader category of stocks known as consumer staples, a group of companies which sell products which are viewed as necessities by many consumers. Given the sticky demand, prevailing Wall Street wisdom suggests these stocks are a strong place to invest during times of economic uncertainty. The easing of tariff led investors to move away from such surefire bets and into riskier, higher-growth areas like technology and travel stocks, and the S&P’s consumer staples sector is the index’s second-worst performing of its 13 subsets in May. And The Tobacco Industry Is Largely Unfazed By Tariffs The tobacco industry does not have a “lot of tariff exposure” as “most of the tobacco” products on American shelves are grown and manufactured in the U.S., Morningstar tobacco industry strategist Kristoffer Inton explained to Forbes. So, as tariffs and recession odds abated, investors’ eagerness to park in an industry largely shielded from their impact slowed. Crucial Quote “It’s addictive. Folks use these products for relaxation and stress easing. Historically in tough economic times, folks won’t cut that habit, and even when they cut other things like vacation or more discretionary spending,” tobacco use “doesn’t change as a result of the economic conditions,” Inton told Forbes. Contra Even after the slump, all three tobacco giants have enjoyed strong performances in 2025. Including dividends, Altria and Philip Morris have returned 10% and 38% year-to-date, respectively, far better than the S&P’s flat return. Philip Morris is the index’s seventh best performer this year. British American Tobacco has delivered a 14% return this year, outstripping the 5% advance of the FTSE 100, the most commonly cited U.K. stock indicator. Tangent The worst-performing S&P stock over the last week is UnitedHealth Group, which announced Tuesday the exit of its CEO and suspended 2025 financial guidance. Other laggards include staple stocks like Dollar General, Hershey and Kroger. Source: https://www.forbes.com/sites/dereksaul/2025/05/13/tariff-market-rebounds-biggest-losers-include-tobacco-stocks-as-smoky-safe-haven-loses-luster/