Sarcasm is an Insult

Description

The use of irony to mock or convey contempt.

Why an Insult?

The people of Nakarado are stern, disciplined people with a strong sense of pride. The idea that one cannot be direct in demonstrating one's disdain is considered cowardly, and will lead others to think less of you as a whole due to what is perceived as a moral failing and open disregard for the intelligence of the receiver of sarcasm.

Byproduct

People will often take what you say literally, especially if they are younger and less traveled, and have not dealt with less than honorable types. To those with power and authority, it is grounds to demand a duel of honor, which may very well cost the life of either person.
Many trade organizations within Nakarado are rather direct and focused on the deal before them, cutting through any banal conversation about family, friends, and so on unless if the partner is connected via blood or relation.
The perception of Nakarado by their brutal interpretation internally has many perceiving the people of Nakarado to be next to humorless, despite a rich tradition of pranks as the primary mode for delivering a joke.

Exceptions to the Rule?

The citizens of Thalin are considered a rude group as is but recognize that they do not understand the customs of the people of Nakarado. As is, only the people of Nakarado have any honor to lose if they let the sleight go unchallenged.
It is said that friends can demonstrate a playful kind of sarcasm towards each other, but only once it is explicitly clear on the nature of their relationship.
Those who are part of the larger society of Nakarado are bound to these expectations however.

Historical Examples

No less than three shogunates were overthrown due to sarcasm directed to a daimyo, leading to exceptionally violent revolutions when the sitting shogun refused to partake in an honor due, to the idea that they were above such an idea.