A well-honed tariff-reduction playbook is giving businesses—and the lawyers who advise them—some confidence that they can deal with President Trump’s latest tariffs.
One of the most effective plays is reducing the reported value of goods companies bring into the U.S. Importers may not be able to escape a tariff, such as the global 15% rate Trump announced after the recent Supreme Court ruling, but they can pay it on a smaller amount.
A legal way to do this has had such an impact that a bipartisan pair of senators wants to ban it.
How it works
Typically, an American importer declares the value of the goods it brings into the country based on what it pays. If an American furniture retailer pays a Chinese trading company $300 for a sofa subject to a 50% tariff, it would normally declare that value and owe U.S. Customs $150.
But under a legal precedent established in the 1980s, companies that dig deeper into their supply chains can report what was paid in the “first sale.” Suppose the original manufacturer of the sofa sold it for $200 to the trading company, which then marked it up to $300. The American retailer can declare the value of the sofa as $200—the first sale—and pay customs only $100 in duties.
“If you’re assuming you have to pay a tariff, then the only way to lower your liability is to change the value a bit,” said Dave Townsend, an international trade lawyer at Dorsey & Whitney.
When tariffs were low, companies often didn’t bother to investigate the first sale price because the paperwork required to prove it was considerable. Now podcasts and webinars have spread the word, and lawyers say the tactic is common.
Another method is “unbundling,” or carving out costs such as insurance or transport that generally aren’t subject to tariffs. Importers try to figure out what part of their import bill is tied to the actual manufacturing of the product—and pay the tariff only on that amount.
Why it matters
Using the first sale rule is one of several steps companies can take to lessen the tariff hit. They can also move production to lower-tariff countries—such as Mexico, whose goods are often tariff-free thanks to its trade deal with the U.S.—or tweak the composition of their goods so they qualify for lower-tariff product categories. And Trump has exempted some goods, such as smartphones and beef, from his tariffs.
All this goes a long way toward explaining why the tariffs haven’t fueled high inflation.
Overall inflation decelerated in 2025. Prices of imported durable goods rose 1.3% from January through November, according to analysis by the Yale Budget Lab, well below what many economists had predicted.
The Penn Wharton Budget Model, which calculates expected tariff payments, estimates that importers avoided paying about $45.7 billion in 2025 through a combination of responses, including frontloading imports from China and using the first sale rule.
“The Trump administration takes the integrity of the President’s tariffs with the utmost seriousness, and foreign exporters should think twice before attempting to undermine America’s tariff regime,” said White House spokesman Kush Desai.
The risks
Importers that suddenly lower the declared value of goods can receive heavy scrutiny from customs officials wary of fraud.
Some small businesses find that the paperwork and legal costs make it prohibitive to use the first sale rule. One requirement is proving that, in the initial sale, it was already clear that the product was intended to be sold to the U.S. And middlemen who deal in goods from Asian factories aren’t always willing to disclose what it really costs to make a sofa or microwave oven.
Still, with more American buyers demanding this type of transparency, Chinese trading companies have to play ball or risk losing business, lawyers say.
Sandler, Travis & Rosenberg, an international trade-law firm credited with pioneering the first sale tactic in the 1980s, employs former customs officials to help it check the paperwork and detect red flags.
“What we want to do is make a really clear documentation paper trail all the way through,” said partner Mark Segrist. “Not as just supported on paper, but that it’s supported in substance, too.”
Challenge in Washington
In February, Sens. Bill Cassidy (R., La.) and Sheldon Whitehouse (D., R.I.) introduced a bill to end use of the first sale rule. They won support from White House trade adviser Peter Navarro, who said Washington law firms were exploiting loopholes to erode the effectiveness of Trump’s tariffs.
The American Association of Exporters and Importers said consumers could feel the blow if importers paid more. “The existing first sale program is heavily vetted, structured and enforced,” the group said.
Write to Jon Emont at jonathan.emont@wsj.com