Trade crime is soaring, US firms say, as Trump’s tariffs incentivize fraud

LEGAL

As President Trump’s tariffs have ratcheted up in recent months, so have the mysterious solicitations some US companies have received, offering them ways to avoid the taxes. Shipping companies, many of them based in China, have reached out to US firms that import apparel, auto parts, and jewelry, offering solutions that they say can make the tariffs go away. The proposals — which are circulating in emails as well as in videos on TikTok and other platforms — reflect a new flood of fraudulent activity, according to company executives and government officials. As US tariffs on foreign products have increased dramatically in recent months, so have the incentives for companies to find ways around them. The Chinese firms advertising these services describe their methods as valid solutions. For a fee, they find ways to bring products to the United States with much lower tariffs. But experts say these practices are methods of customs fraud. The companies may be dodging tariffs by altering the information about the shipments that is given to the US government to qualify for a lower tariff rate. Or they may physically move the goods to another country that is subject to a lower tariff before shipping them to the United States, a technique known as transshipment. The Trump administration said this month that it would focus more on fighting trade fraud, including tariff evasion. The administration is also trying to convince other countries to step up their own enforcement efforts, including in trade talks with Vietnam, Mexico, and Malaysia. But many US companies say the scale of illicit activity now far outweighs the ability of these governments to thwart it. — NEW YORK TIMES

LEGAL

A third White House executive order targeting a major law firm has been struck down. US District Judge Richard Leon ruled Tuesday in favor of the WilmerHale law firm in holding that an executive order that sought to punish its lawyers was unconstitutional. The ruling is yet another setback to Trump’s retribution campaign against the legal profession, coming just days after a different judge blocked a separate order against another firm, Jenner & Block. In his holding, Leon wrote that the “cornerstone of the American system of justice is an independent judiciary and an independent bar willing to tackle unpopular cases, however daunting.”

AVIATION

Southwest Airline’s longtime free luggage policy on basic economy fares will end on Wednesday when the airline begins charging a $35 fee for one checked bag and $45 for the second, according to a spokesperson for Southwest. Until now, Southwest was the only major US airline that allowed passengers to check two bags at no extra cost, but in March, the airline announced that it would start applying baggage fees to boost revenues and cut costs. The airline reported a net loss of $149 million in the first quarter. Under the new policy, customers flying Business Select or those with high loyalty status will be spared the additional fees; passengers with a Southwest Airlines co-branded credit card will be able to check one standard bag at no additional cost. Checked bag fees will apply to tickets booked on or after May 28 for Basic, Wanna Get Away Plus, and Anytime fares. The baggage fees are in line with other major US airlines, which typically charge between $35 and $45 for a first checked bag. — NEW YORK TIMES

CRYPTO

Trump Media & Technology Group, the parent company of Truth Social, said Tuesday that it would raise $2.5 billion from institutional investors to invest in bitcoin, continuing its transformation from a social media company into a financial services and cryptocurrency play. Trump Media, whose largest shareholder is President Trump, said it would raise $1.5 billion from about 50 institutional investors by selling roughly 58 million shares. The company is planning to raise an additional $1 billion from the sale of bonds that can also be converted into shares at a later date. The announcement came as the president and his family have become more involved in a number of crypto companies. Trump owns a little more than 50 percent of Trump Media’s stock, making his roughly $2.7 billion stake one of his most valuable investments. The sale of the new shares will potentially dilute the value of Trump Media’s stock, including the 115 million shares that Trump owns. The president’s shares are held in a trust managed by his eldest son, Donald Trump Jr., who also is a Trump Media board member. As part of the deal, which could close as soon as Thursday, the shares will be sold at $25.72. Trump Media, which has a market value of just over $5 billion, said with the cash raised from the stock and bond sale it would create one of the largest corporate reserves to invest in bitcoin. The company did not immediately disclose the investors in the deal. Trump Media went public a little more than a year ago, after completing a merger with a cash-rich shell company. But the company has been losing money ever since, and Truth Social has generated just a few million dollars in advertising revenue, even as the social media platform serves as Donald Trump’s primary online megaphone for communicating to the public. — NEW YORK TIMES

ECONOMY

US consumer confidence rebounded sharply in May from a near five-year low as the outlook for the economy and labor market improved amid a truce on tariffs. The Conference Board’s gauge of confidence increased by 12.3 points to 98, marking the biggest monthly gain in four years. The figure exceeded all estimates in a Bloomberg survey of economists. A gauge of consumer expectations for the next six months surged by the most since 2011, while a measure of present conditions climbed as well, data released Tuesday showed. The improvement in confidence was broad across age and income groups as well as political affiliations, with the strongest gains among Republicans. The cutoff for the survey was May 19, after the United States and China agreed to temporarily reduce high levies on each other’s goods while they negotiate a trade deal. About half the responses were collected after the agreement was reached on May 12, according to a statement. “The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards,” Stephanie Guichard, senior economist at The Conference Board, said in the statement. The gauge’s improvement may be an indication that worries about tariffs — a key source of anxiety in the previous surveys — abated in recent weeks. However, President Trump has since renewed threats to increase levies on other countries and products. — BLOOMBERG NEWS

ACQUISITIONS

Salesforce is buying AI-powered cloud data management company Informatica in an approximately $8 billion deal. Informatica’s shareholders will receive $25 per share, a premium of about 11 percent from Friday’s closing price of $22.55. The transaction will give Salesforce access to Informatica’s data management capabilities. Informatica was taken private in 2015 by private equity firm Permira and the Canada Pension Plan Investment Board for about $5.3 billion. It went public again in 2021. Both companies’ boards have approved the deal, which is expected to close early in Salesforce’s fiscal 2027. — ASSOCIATED PRESS

TRANSIT

New York won a court order temporarily barring the Trump administration from withholding federal approvals or funds for the state’s transportation projects, as the president tries to end Manhattan’s congestion pricing program. The administration has threatened to hold back the funds and permissions unless New York stops charging tolls to drive into the borough’s tolled zone. US District Judge Lewis Liman on Tuesday granted a request by the Metropolitan Transportation Authority to block such efforts by the federal government through June 9 while he considers whether the United States has the legal right to terminate the toll. Liman’s ruling means the program — meant to reduce gridlock and pollution and raise money to modernize the city’s transit system — will almost certainly continue as the legal battle proceeds. It helps reduce uncertainty over how the nation’s largest public transportation system will pay to modernize a more than 100-year-old network. The judge ordered the two sides to meet to decide how to speed up the process, saying there is a “public interest in moving the case along.” — BLOOMBERG NEWS