Companies Dodge Tariffs, Keeping Prices Low

0:00On March 1st, U.S. companies are dodging billions in tariff costs despite President Trump's new 15 percent global tariffs thanks to smart legal moves. This helps explain why higher trade barriers have sparked the inflation many expected. Importers have cut their bills by about $46 billion in 2025 alone, keeping consumer prices in check. Businesses are using a few main tricks. One is basing duties on the first sale price in the supply chain, often much lower than the final cost to the importer. Another involves splitting invoices to exclude shipping or insurance from taxable values. Many are also shifting production to places like Mexico where goods face little or no tariffs under trade deals. Prices for imported durable goods climb just 1.3 percent from January through November 2025, way below early predictions. Prices at Yale and Penn Wharton note these strategies, along with supply chain tweaks, have cushioned the blow and tame broader inflation.

1:02Now there's pushback from Washington. Lawmakers have proposed bills to scrap the first sale option, arguing it undercuts tariff goals and revenue. Why House officials echo that, while business groups defend the practices as legal and vetted, warning changes could hike prices for everyone. These adjustments show how flexible trade rules can blunt policy impacts, stabilizing costs for now, as debates heat up over closing the gaps.