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US Businesses Exploit Legal Tariff Loophole Amid Trump-Era Trade Policies
US Businesses Exploit Legal Tariff Loophole Amid Trump-Era Trade Policies
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American importers are leveraging a decades-old customs regulation—the ’first sale rule’—to mitigate the financial impact of Trump-era tariffs. The provision, established in 1988, allows companies to declare the value of imported goods based on the manufacturer’s initial sale price rather than the inflated cost after intermediary markups.
The tactic, highlighted in a CNBC report, underscores the creative compliance strategies emerging in response to trade barriers. A Chinese factory selling a t-shirt to a Hong Kong distributor, for instance, could see its U.S. tariff assessment slashed by 50% or more under this mechanism.
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