European brands count on old customs rule to ease the impact of import duties

European brands are seeking creative solutions to mitigate the impact of the new American import tariffs. An old customs rule comes into play, even though it brings its own challenges and risks.

Only a 3 % increase in retail price

Now that Donald Trump is imposing a 15 % import tariff on goods from the European Union, many European brands fear for their profit margins. Implementing price increases is not straightforward, as American consumers – after years of inflation – are sensitive to any price hike. Therefore, more and more fashion and cosmetics brands are reverting to the so-called “First Sale” rule, a clause in United States customs law that allows importers, under strict conditions, to have tariffs calculated based on the factory value of a product, rather than the final retail price.