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Legal Update

US Customs Abandons Proposed Change to First Sale Rule for Customs Valuation of US Imports

5 October 2010
Mayer Brown Legal Update

US Customs and Border Protection (CBP) has abandoned its plans to change a longstanding methodology for calculating import tariffs. After receiving more than 100 largely negative comments from importers, CBP withdrew its proposed change to the “first sale rule” for valuing imports in a September 29, 2010, Federal Register notice. The withdrawal of the rule represents a victory for importers that believed that the proposed change would have resulted in higher import duties. The first sale rule is a method for determining the transaction value of imported goods. “Transaction value” is defined under US law as “the price actually paid or payable for merchandise when sold for exportation to the United States.” Under the first sale rule, the value of imported items subject to a series of sales during the importation process is based upon the price paid in the first sale in the series. Thus, importers can value their merchandise based on the price paid by a foreign intermediary to the foreign manufacturer, rather than the price paid by the US importer to the foreign intermediary.

In January 2008, CBP proposed a new interpretation of US law under which the transaction value would be the price paid in the last sale occurring prior to the introduction of goods into the United States, instead of the first sale. (For more information, see our article, “The First Shall Be Last: US Customs Proposal Would Broadly Increase Tariffs on US Imports.”) As result of that interpretation, importers would have been required to value their merchandise based on the price paid by the US importer to a foreign intermediary, rather than on the price paid by the foreign intermediary to the foreign manufacturer. Importers were concerned that this “last sale” interpretation would always result in an increase in the transaction value of goods and therefore higher import duties. 

After CBP announced its proposed new interpretation in 2008, Congress passed legislation requiring the US International Trade Commission (ITC) to review the use of the first sale rule. (For more information, see our article, “Investigation Initiated Into Use of First Sale Rule for Customs Valuation of US Imports.”) The ITC found that although the first sale rule was used by fewer than 10 percent of importers, the rule was used most frequently by importers of high-tariff goods such as apparel and footwear. Not surprisingly, apparel and retail groups were the most vocal opponents of the proposed change. Their efforts, as well as those of other US importers, successfully halted a change that would have raised costs for American businesses and, ultimately, American consumers. 

For more information about the first sale rule and how it can benefit your business, please contact or

Learn more about our Global Trade practice.


  • Sydney H. Mintzer
    T +1 202 263 3866
  • Margaret-Rose Sales
    T +1 202 263 3414

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