Do you know why it's called a fag in England but it's called a cigarette in the U.S.A.?

It's not always called a fag in England, that's more of a slangy way to say it. We say cigarette too :)

Fag Usa

It is an abbreviation of "fag-end". The word has many meanings. It is USA usage that has it meaning homosexual, that is not the case in England which is why there are problems when people use the word differently. Another difference that can cause problems is "rubber". In Britain a rubber is an eraser, in the USA it is a condom.

"Fag" is British slang and informal British English for "cigarette" (originally, especially, the butt of a smoked cigarette), first attested in 1888, probably from "fag" meaning 'loose piece', or 'last remnant of cloth' (late 14c., as in "fag-end" meaning 'extreme end', or 'loose piece', first attested during the 1610s)

The American term "fag" meaning 'homosexual' is a shortening of the American slang term "f*ggot" meaning "male homosexual", first attested in 1914.