Tariffs continue to make headlines: US President Donald Trump recently threatened a new 50% tariff on all goods from the European Union, which he now credits for the “positive” news that the EU will set a meeting to discuss a trade deal.
The 50% tariff was first set to take effect on June 1st, but this has been pushed to July 7th.
Meanwhile, businesses are adjusting to the new international duties in a variety of ways. Some are turning to a little-used customs law. Others are simply comitting criminal acts, if the rise in trade crime is any indicator.
50% EU Tariffs Are Still Coming
The announcement of the 50% tariffs, which was then toned down just a tad by the delay in implimentation, appears to be behind the change of pace in negotiations.
Trump now says that Ursula von der Leyen, the president of the European Commission, “wants to get down to serious negotiations.”
This just in! View
the top business tech deals for 2025 👨💻
Trump’s public voice in the conversation has emerged through social media posts. First, on May 23rd, he announced plans for a 50% tariff. Then, a few days later, he again took to social media to announce the extension, saying “I agreed to the extension — July 9, 2025 — It was my privilege to do so.”
Now, he says he’s “extremely satisfied” with the pace of progress, although no deal has yet been struck.
“I was extremely satisfied with the 50% Tariff allotment on the European Union, especially since they were “slow walking (to put it mildly!), our negotiations with them. Remember, I am empowered to “SET A DEAL” for Trade into the United States if we are unable to make a deal, or are treated unfairly. I have just been informed that the E.U. has called to quickly establish meeting dates. This is a positive event, and I hope that they will, FINALLY, like my same demand to China, open up the European Nations for Trade with the United States of America. They will BOTH be very happy, and successful, if they do!!!” –President Trump
It’s unclear what Trump means when he says that he’s “empowered to ‘set a deal'” if “we are unable to make a deal.”
The “First Sale Rule” Workaround
Meanwhile, businesses are trying a peculiar workaround for the steep new tariffs they’re facing at major trading partners like China. After losing the de minimis exemption, businesses are eager to find a new loophole. The next candidate? The “first sale rule.”
This decades-old U.S. customs regulation lets importers value a good at the lowest possible cost when calculating the duties they’ll owe on that product.
The term “first sale” refers to the inital price of the product, before it’s marked up by the middleman and eventual reaches its retail price. If a Hong Kong vendor pays $5 for a T shirt, the “first sale rule” lets them pay taxes based on that amount, even if it’s being shipped because it sold to a US retailer for double that price.
Businesses Get Creative With Tariffs
The first sale rule can save a business a lot of money, since it allows the sky-high tariffs to be calculated from a much lower starting point.
The catch? Vendors need some extra information in order to qualify for this regulation, with documentation of the first sale price being the toughest to get. Needless to say, Hong Kong vendors don’t see a reason to reveal how large their profit margins are, if there’s no benefit to themselves. Now, though, sharing that information might help them retain their heavily taxed US customers.
The regulation is entirely legal, so it at least beats the alternative: Fraud and trade crime have risen notable, according to a New York Times investigation that also notes regulatory agencies may not be equipped to deal with it, saying that “customs and Justice Department officials who have focused on trade crime have been reassigned to work on immigration and other issues in recent months.”
