Despite sweeping new duties, U.S. companies have found ways to trim billions from their tariff bills — helping explain why higher trade barriers haven’t translated into a surge in inflation, The Wall Street Journal reports.
Even after President Trump imposed a global 15% tariff following a recent Supreme Court ruling, many importers have legally reduced what they owe by lowering the declared value of their goods or shifting production strategies.
The result: tariff costs have been cushioned — and consumer prices have remained more stable than many economists predicted.
Prices of imported durable goods rose just 1.3% from January through November 2025, according to analysis by the Yale Budget Lab — a modest increase compared with broader inflation in prior years and far below early forecasts that tariffs would sharply lift goods prices.
The Penn Wharton Budget Model estimates companies avoided roughly $45.7 billion in tariff payments in 2025, using a combination of legal strategies, supply-chain shifts and timing adjustments.
At the center of those savings are three key practices: the “first sale” rule, unbundling costs, and moving production to lower-tariff countries.
‘First Sale’
The most powerful tool is a decades-old legal precedent known as the “first sale” rule.
Normally, an importer pays tariffs based on the price it pays a foreign supplier. But under the first-sale doctrine — established in the 1980s — companies can instead declare the price charged in the earliest transaction in the supply chain, if properly documented.
That distinction can significantly reduce 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.
For example, if a Chinese manufacturer sells a product to a middleman for $200, and the middleman resells it to a U.S. retailer for $300, the retailer may be able to pay tariffs on the $200 “first sale” price instead of $300 — cutting the duty base by a third.
When tariffs were low, many companies didn’t bother with the documentation required to qualify. With rates now higher, lawyers say interest in the strategy has surged.
Unbundling
A second tactic involves “unbundling.”
Tariffs typically apply to the manufacturing value of a product — not necessarily to shipping, insurance, or certain service-related costs. Companies are increasingly dissecting invoices to separate out non-dutiable charges and ensure tariffs apply only to the core product value.
The strategy requires meticulous recordkeeping, and customs officials closely scrutinize sudden valuation changes. But when done correctly, it can materially lower a company’s effective tariff rate.
“What we want to do is make a really clear documentation paper trail all the way through,” said Mark Segrist, a partner at Sandler, Travis & Rosenberg. “Not as just supported on paper, but that it’s supported in substance, too.”
Lower-Tariff Countries
A third approach is geographic: moving production to countries with lower or zero tariffs.
Mexico has been a key beneficiary.
Thanks to its trade agreement with the United States, many goods manufactured there enter duty-free or at reduced rates. Companies have also diversified sourcing across Southeast Asia and Latin America to avoid steeper country-specific duties.
These shifts — along with exemptions for certain products — have softened the overall impact of tariffs on consumer prices.
Inflation Tamed
Together, these strategies help explain why tariffs haven’t ignited runaway inflation.
Overall U.S. inflation cooled in 2025, and import price data show only limited upward pressure from goods directly affected by tariffs. Strong supply-chain adjustments and competitive pressures have also prevented many firms from passing on the full cost of duties to consumers.
Still, the White House has signaled concern about what it views as erosion of tariff effectiveness.
“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 Kush Desai, a White House spokesman.
The growing use of the first-sale rule has sparked pushback in Washington.
In February, Sens. Bill Cassidy, R.-La., and Sheldon Whitehouse, D.-R.I., introduced legislation that would eliminate the first-sale doctrine. Supporters argue it weakens the impact of tariffs and reduces federal revenue.
Trade adviser Peter Navarro has backed the effort, contending that law firms are exploiting technicalities to blunt tariff policy.
Business groups disagree.
The American Association of Exporters and Importers has defended the practice, arguing that it is well-established and carefully regulated — and that eliminating it would ultimately raise costs for consumers.
“The existing first sale program is heavily vetted, structured and enforced,” the group said, warning that higher import costs would likely be passed along in the form of higher prices.
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