🔹 American companies have found a perfectly legal way to significantly reduce import duties. They are relying on a lesser-known clause in U.S. customs law that allows them to calculate tariffs based on the original manufacturing price — not the inflated prices paid to middlemen.

The “First Sale Rule,” introduced back in 1988, allows U.S. firms to pay tariffs on the price at which goods were initially sold by the manufacturer — often overseas — instead of the higher amount paid by the U.S. importer after passing through one or more intermediaries.

🔹 For example: A Chinese factory sells a T-shirt to a Hong Kong distributor for $5. That distributor then sells it to an American retailer for $10, who later sells it to consumers for $40. Thanks to the First Sale Rule, the U.S. retailer can calculate the import tariff based on the $5 price — not the inflated $10 cost. This removes the middlemen's markup from the tariff calculation.

The Rule Comes With Conditions

This cost-saving approach isn’t a free-for-all. To apply the First Sale Rule, companies must prove:

🔹 there were at least two independent sales (between unrelated entities),

🔹 the goods were clearly destined for the U.S. market,

🔹 and complete documentation is provided, including proof of the initial sale price.

That can be tricky. U.S. trade attorney Brian Gleicher explains that securing detailed pricing information from foreign suppliers isn’t always easy. “Suppliers often don’t want to share this kind of data,” he says.

Rich Taylor, an advisor working with American firms in China, adds: “There has to be trust between all parties. If you show your customer you’re helping them reduce costs, they’ll work with you.”

From Fashion to BBQ Grills – Companies Are Saving Millions

Many companies, both American and international, are now taking advantage of this strategy. Luxury fashion brand Moncler, for example, described the First Sale Rule as a “significant cost benefit” during an April earnings call. According to logistics chief Luciano Santel, the company’s first sale prices are half the cost of their intercompany prices.

U.S. firms such as Traeger, a grill manufacturer, and Fictiv, a manufacturing services provider, also mentioned using the First Sale Rule in recent earnings calls, describing it as a “mitigating factor in the supply chain” that helps reduce duties and import costs.

Legal – But Politically Controversial

While completely legal under U.S. customs law, the First Sale Rule runs counter to the goals of Trump’s trade agenda. The former president raised tariffs to push companies to bring manufacturing back to the U.S. But if firms can legally avoid the tariffs, those efforts lose their impact.

U.S. Customs and Border Protection has declined to say how many companies are currently using the rule, but it’s clear the practice is gaining momentum — particularly in industries with high profit margins, like luxury goods and tech.

Meanwhile, Trump has temporarily suspended a planned 50% tariff hike on goods from the European Union. On Sunday, he announced on Truth Social that the hike won’t take effect until at least July 9, giving companies more time to optimize their import strategies



#Tariffs , #USPolitics , #TRUMP , #tax , #TRUMP

Stay one step ahead – follow our profile and stay informed about everything important in the world of cryptocurrencies!

Notice:

,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“