In the postwar period, the West German tobacco industry faced several challenges, not least competition from smuggled Virginia cigarettes. This reflected the Americanization of smoking tastes and threatened domestic tax revenue. The popular preference for ‘American blend’ cigarettes also hindered trade with Greece and Turkey, suppliers of Oriental tobacco to German manufacturers. The proposed solution was tax cuts to stimulate demand for domestically produced cigarettes. These proposals antagonized welfare groups, who saw tax cuts as a threat to the health of the population. The ensuing debates and settlement shed new light on the liberal smoking policies of postwar West Germany.