Key Takeaways:
- Duty drawback and the First Sale Rule can unlock significant savings for importers facing rising tariffs.
- Customs valuation strategies must align with transfer pricing policies to avoid costly mismatches.
- Accurate tariff classification and cost unbundling help reduce duties and manage compliance risks.
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The global trade environment continues to shift under unpredictable tariff policy changes. Since President Trump’s return to office, a series of new, paused, and reintroduced tariffs — targeting everything from steel and autos to pharmaceuticals — have reshaped the compliance landscape for importers and exporters. The results: retaliatory actions, pricing uncertainty, supply chain disruptions, and compliance challenges for businesses engaged in international trade.
In this environment, planning is critical. Companies must anticipate tariff impacts across the full supply chain and identify opportunities to reduce cost and risk through duty relief programs and valuation strategies.
Key Duty and Tariff Strategies for 2025
These strategies can help your business manage costs, stay compliant, and protect supply chains as trade policies continue to shift:
1. Duty Drawback
Businesses that export goods after importation may be eligible for up to 99% duty refunds under the U.S. duty drawback program. This benefit applies when goods are exported unused, destroyed, or used to make exported products. But documentation requirements are strict — especially when the exporter and importer are different entities.
Notably, some tariffs (e.g., Section 232 steel/aluminum and International Emergency Economic Powers Act (IEEPA) fentanyl-related tariffs) are excluded. A full review of eligible goods and data is critical.
2. First Sale Rule (FSR)
Importers can reduce duties by declaring the value of goods based on the first sale in a multi-tiered supply chain, rather than the marked-up resale price. Even companies with only a single-tier supply chain may explore creating a compliant intermediary to use FSR. Success depends on proving the goods were clearly destined for the U.S. and that all sales are arm’s-length.
3. Cost Unbundling
Importers may overpay duties if nondutiable costs — such as R&D, distribution rights, or U.S.-based services — are included in customs value. A cost unbundling analysis can identify and separate these costs, leading to duty savings.
4. Transfer Pricing Alignment
With related-party imports making up half of all global merchandise trade, transfer pricing policies often drive customs valuations. But customs authorities apply different standards than tax authorities. Companies should check that their pricing supports both compliance frameworks — especially when making year-end transfer pricing adjustments that affect reported customs value.
5. Tariff Classification Accuracy
As new tariffs evolve, accurate tariff classification is more important than ever. Misclassification can lead to overpayment — or underpayment — of duties and penalties. Companies should also review available product exclusions under Section 301 and other trade remedies.
Supporting Smarter Trade Strategy in a Volatile Market
In an environment of shifting tariffs and global trade uncertainty, MGO helps businesses take control of their customs and trade strategy. We work with importers and exporters to uncover overlooked duty relief opportunities — from leveraging the First Sale Rule to improving refunds through duty drawback programs.
Our team brings together international tax, transfer pricing, and trade experience to enhance customs valuation aligns with intercompany pricing policies, minimizing compliance risk and unlocking potential savings. We also help companies assess whether embedded costs — such as R&D or buying commissions — can be unbundled to reduce dutiable value.
With tariff classifications under scrutiny and new enforcement priorities emerging, we guide clients through product eligibility reviews and help document claims for exclusions. The result is a more agile, resilient approach to managing trade exposure — one that supports both short-term cost control and long-term supply chain strategy.
Reach out to our team today to identify duty savings, optimize customs valuation, and safeguard your business against evolving trade risks.