First Sale for Export: Lowering Customs Value Legally When Tariffs Stack

By Bernardo Campelo, Forbes Business Council E-Commerce Leader, Amazon SPN Certified provider, Amazon SP-API authorized partner, and Founder of PrepVia.

As of October 29, 2026, an importer that buys through a middleman can still ask U.S. Customs and Border Protection to value its goods at the price the middleman paid the factory, the "first sale," instead of the price the importer paid. Under 19 U.S.C. 1401a(b)(1), transaction value is "the price actually paid or payable for the merchandise when sold for exportation to the United States," plus a short list of additions. When goods are sold more than once before they ship, an earlier sale can be that sale.

The burden is on the importer. CBP's Informed Compliance Publication on bona fide sales and sales for exportation, dated August 2005 and still posted on cbp.gov, says: "There is a presumption that transaction value is based on the price actually paid or payable by the importer for the imported merchandise under consideration. The burden is on an importer to rebut this presumption."

The stakes rose in 2026. Since 12:01 a.m. Eastern on July 24, 2026, products of China, with listed exemptions, are assessed an additional ad valorem rate of duty of 12.5% under the Section 301 forced-labor action, according to CBP's CSMS # 69326983. That layer is separate from the 2018 Section 301 actions on China, which USTR said in an October 7, 2026 notice "will remain in effect, subject to possible further modifications." If you are renegotiating supply contracts for 2027, ask your middleman now whether it will open its books.

Every date and name below was checked on October 29, 2026 against the U.S. Code, the eCFR, the Federal Register, cbp.gov, CBP's Cargo Systems Messaging Service, GovInfo and the court opinions themselves, linked where they first appear. CBP's guidance dates from 1996 and 2005, and the court's reasons for the June 2026 Meyer judgment are still confidential. This is general information, not customs or legal advice: take your chain to your licensed customs broker or a trade attorney before you declare a first-sale value.

Where the First-Sale Rule Comes From

The phrase "sold for exportation to the United States" appears in the statute and again, word for word, in 19 CFR 152.103(b)(1), whose text has not changed since July 2017, according to the eCFR's version history. Neither one defines it. In a 2008 Federal Register document, CBP wrote that the phrase "is not defined in 19 U.S.C. 1401a, nor in the implementing regulations set forth in part 152." The first-sale rule is how courts and CBP read it in a chain of sales.

CBP's guidance rests on Nissho Iwai American Corp. v. United States, 982 F.2d 505 (Fed. Cir. 1992), a case over subway cars that the Metropolitan Transportation Authority of New York City bought through Nissho Iwai companies, with Kawasaki as the primary Japanese manufacturer. As CBP describes it, the court valued the cars at the Kawasaki-Nissho Japan price. In the passage CBP quotes, the court held that "The manufacturer's price constitutes a viable transaction value when the goods are clearly destined for export to the United States and when the manufacturer and the middleman deal with each other at arm's length," absent non-market influences that affect the legitimacy of the price.

CBP tried to end the rule once. A January 24, 2008 notice proposed using the price in the last sale before the goods entered the United States, "instead of the first (or earlier) sale." Congress answered in section 15422 of the Food, Conservation, and Energy Act of 2008. In CBP's summary, a "sense of Congress" provision advises CBP not to change its interpretation before January 1, 2011, and after that to propose a change only after notice to and consultation with the House Ways and Means and Senate Finance committees and its Commercial Operations Advisory Committee, and with "the explicit approval of the Secretary of the Treasury prior to publishing a change."

CBP withdrew the 2008 proposal on September 29, 2010. As of October 29, 2026, the Federal Register shows no later CBP proposal to change the interpretation.

One caution: the 2005 publication and T.D. 96-87, the 1996 notice it reprints, are guidance. The cbp.gov page hosting the publication says such documents "are not binding and lack the force and effect of law," except as authorized by law or incorporated into a contract. They still show how CBP reads a first-sale file.

Three Conditions, as CBP Applies Them

T.D. 96-87, issued by the U.S. Customs Service in December 1996, requires documentary evidence of three things about the factory-to-middleman sale, plus sufficient information on the statutory additions. Each condition can fail on its own.

A first sale has to be a sale. CBP considers whether the middleman "has assumed the risk of loss" and "acquired title," whether it paid, and whether it was free "to sell the imported merchandise at any price it desired" and to pick "its own customers without consulting the seller." If not, that is "an indication that the party is serving as an agent," and there is no separate sale to use. When the shipping terms pass title from the factory to the middleman and "immediately thereafter" to the U.S. buyer, the publication says that, on the terms alone, "a bona fide sale would not appear to have occurred," though CBP weighs other evidence too.

The second condition is about timing. The goods must have been "irrevocably destined for the United States" when the middleman bought or contracted to buy them; proof "at the time of shipment, near the end of the transaction" is not sufficient. In CBP's lamp example, evidence that the boxes were addressed to the United States is "insufficient by itself," while lamps built to U.S. electrical requirements and the U.S. retailer's designs, with its labels, logos, stock numbers and bar codes, and shipped directly to the United States would show it. Our reading: a generic item the middleman could have sold anywhere is harder to place than one built to your specifications.

The third condition depends on the relationship. "In general, CBP will consider a sale between unrelated parties to have been conducted at 'arm's length.'" If the factory and the middleman are related, the first-sale price faces the same related-party test as any other, under 19 U.S.C. 1401a(b)(2)(B) and 19 CFR 152.103(j)(2): the relationship did not influence the price, or the price closely approximates a test value. Our post on importing through a U.S. subsidiary walks through both routes.

The Paper Trail CBP Expects

In the publication's words, T.D. 96-87 requires "(1) a detailed description of the roles of each of the parties involved in the multi-tiered transaction and (2) a complete paper trail." That means "invoices, sales contracts, purchase orders, proof of payment, shipping contracts or other documentation for each individual transaction involved in the multi-tiered transaction with consistent prices, dates, parties and merchandise." The notice's own example uses 100 hair dryers:

• January 5, 1996. The importer orders them at $6 each from the middleman, with its specifications.
• January 10, 1996. The middleman orders them at $5 each from the manufacturer, with the same specifications.
• February 10, 1996. The manufacturer ships to the importer; the packing list shows the specifications.
• February 12, 1996. The middleman bills the importer $600, paid by check.
• February 13, 1996. The manufacturer bills the middleman $500, paid by check.

The importer's own purchase is half of that file. The other half is a sale it was not part of, documented down to the payment.

Then come the additions: packing costs and selling commissions incurred by the buyer, assists, certain royalties and license fees, and resale proceeds that accrue to the seller. If sufficient information is not available for any of them, the statute says the transaction value "shall be treated, for purposes of this section, as one that cannot be determined." T.D. 96-87 applies that to the middleman: the importer must say whether the middleman "provided any assists to the manufacturer" and what they were worth, and "If the importer does not have this information, transaction value cannot be based on this sale."

Assists include materials, components, tools, dies and molds that the buyer supplies free of charge or at reduced cost. In H208055 (October 12, 2012), summarized in CBP's Customs Valuation Encyclopedia, CBP found the goods should be appraised on the first-sale prices a middleman paid its related manufacturer, but said "an addition should have been made" for "the fabric and other materials used in producing the goods that were supplied to the manufacturer free of charge as assists."

Our reading: the paper trail runs through the middleman's books. The factory invoice, the middleman's proof of payment and the value of anything the middleman supplied to the factory, set next to your own invoice, show the middleman's margin. If the middleman will not share them with you, your broker or your attorney, there is no first sale to declare.

How First-Sale Claims Fail in CBP's Decisions

The Customs Valuation Encyclopedia, CBP's own summaries of its valuation decisions from 1980 to 2021, shows several first-sale cases turning on the same points:

• A shared address. In H161677 (July 11, 2013), a middleman claimed it was not related to the Chinese manufacturer, and CBP rejected the arm's-length presumption "because the protestant middleman had the same address and telephone number in China as the manufacturer."
• The parent's numbers missing. In H106603 (July 25, 2011), a related-party apparel claim used the "all costs plus a profit" method without the profit of the parent corporation, and CBP did not accept a comparison between the factory's profit and that of related factories.
• A transfer pricing study that did not fit. In H088815 (September 28, 2011), with importer, middleman and factory all related, the study "did not include companies that were direct competitors, the study did not cover the relevant time period, and the study was not reviewed by the IRS."

The encyclopedia stops at 2021; later rulings are in CBP's rulings database, CROSS, which your broker or attorney can search. The summaries show what CBP has asked to see, not your outcome.

Meyer: What the Federal Circuit Changed, and What Is Still Sealed

Nissho Iwai's words "non-market influences" were tested in a cookware case. Meyer Corporation, U.S. imported pots and pans made in China and Thailand through a chain of related manufacturers and distributors, and the Court of International Trade required it to prove its first sales were also unaffected by China's status as a nonmarket economy. On August 11, 2022, in Meyer Corp., U.S. v. United States, 43 F.4th 1325, the Federal Circuit vacated that part of the ruling: "There is no basis in the statute for Customs or the court to consider the effects of a nonmarket economy on the transaction value." In context, it said, "'nonmarket influences' just refers to influences growing out of the relationship of buyer and seller that distort the 'price paid or payable.'"

On remand, the trial court again rejected the first-sale price, finding Meyer's failure to produce financial documents for its parent holding company dispositive. On December 13, 2024, the Federal Circuit vacated again because the trial court "improperly applied an evidentiary presumption against Meyer and failed to address record evidence."

The Court of International Trade ruled again on June 12, 2026, in Slip Op. 26-60. Its docket entry on GovInfo reads "On remand from the U.S. Court of Appeals for the Federal Circuit, judgment for Defendant," and the defendant is the United States. The reasons are not public: as of October 29, 2026, the court's 2026 slip opinion list says "This opinion is confidential. The public version will be posted as soon as it is available."

That judgment does not undo the Federal Circuit's 2022 holding, which binds the trial court: the effects of a nonmarket economy stay out of the transaction value analysis. Our reading: for goods from China, origin by itself is not the test; the relationship and the file are. In a related chain, expect questions about the group's parent, as in Meyer's first remand and H106603.

Why It Weighs More When Tariffs Stack

Valuation is the base, and in 2026 more sits on it. For products of China, the forced-labor layer is heading 9903.05.31, with exemptions in headings 9903.05.85 to 9903.05.92, and products covered by the 2018 Section 301 actions, as modified, still carry those duties unless an exclusion applies.

Each layer is a percentage of value. If CBP accepts a first-sale value for a line, the ad valorem rates on that line are charged on it; if it rejects the claim, they are charged on the importer's price. Some lines have their own valuation rules, so confirm the base and the rate for each line with your broker before the entry; the declaration is still the importer's.

There is no general savings figure to quote: it depends on the factory price, the middleman's margin, the additions and CBP's acceptance. Our posts on the 2026 tariff stack and landed cost per unit show where customs value enters unit cost.

"When duty is a percentage of value, the value you declare sets the bill. First sale is a documentation project first. If the paper trail is not there, there are no savings to talk about."

Bernardo Campelo, Founder of PrepVia

Declaring It: Reasonable Care, Rulings and Who Does What

The legal duty sits with the importer of record. Under 19 U.S.C. 1484 the importer must use reasonable care, and CBP's publication applies that here: before declaring a value based on a sale it was not the buyer in, the importer "should be sure that such a transaction satisfies the criteria" and be ready to submit the evidence "upon request by CBP." Otherwise, "An importer who declares a value to CBP without the necessary supporting documentation would not be exercising reasonable care and may be subject to a penalty or other enforcement compliance action."

The regulations no longer require a first-sale flag. For goods entered from August 20, 2008 through August 19, 2009, an interim rule required importers to "enter an 'F' next to the declared value on CBP Form 7501" when the value rested on an earlier sale, so CBP could report first-sale use to the International Trade Commission. The authority expired, and CBP removed the paragraph from 19 CFR 141.61, effective December 30, 2010. CBP's "First Sale Declaration" page still reads in the present tense, but its notices date from 2008; any indicator in filing software is a question for your broker.

An importer can ask CBP for an advance ruling first, but "the above-mentioned documentation must be submitted with the advance ruling request," and under T.D. 96-87, "If insufficient evidence is provided, the claim will be denied." If CBP has grounds to reject the declared transaction value and the rejection would raise the duty, 19 CFR 152.103(m) requires it to tell the importer why, and the importer has 20 days to respond in writing if it disagrees.

The factory and the middleman supply the documents, the importer of record declares, the licensed customs broker files the entry, and a trade attorney advises on structure, rulings and protests; our guide to who does what between broker, forwarder and 3PL covers the broker's side and the importer of record's. Before a first entry on a first-sale basis, settle these points with your broker and attorney:

• The chain. Every party, its role and any relationships.
• Both sales. Orders, contracts, invoices and proof of payment for both sales, with matching prices, dates, parties and quantities.
• Destination at purchase. Evidence the goods were bound for the United States when the middleman bought them.
• Additions. Packing, commissions, assists, royalties and resale proceeds for the factory sale, with values.
• The relationship file. If factory and middleman are related, the related-party evidence, including the parent's numbers.

Where a Prep Center Fits

A prep center meets the goods after CBP releases them. By then the entry has been filed, and the entry summary with the declared value has been filed too or is due within 10 working days of entry. A receiving record shows what arrived, how many units and in what condition; it says nothing about what the factory charged and cannot stand in for any part of the paper trail. Where the dock matters is quantity: if the count differs from the invoice, the importer and its broker decide whether the entry needs a correction, as our post on when a receiving discrepancy becomes a post-summary correction explains.

At PrepVia, imported freight is received at 8507 NW 72nd St, Miami, FL 33166, inspected, counted against the packing list and routed into Amazon FBA, with labeling, kitting and case pack, and Amazon partnered LTL and FTL out. Discrepancies are reported within 24 hours of arrival, with photos. PrepVia is Amazon SPN Certified, with a prep window of 24-36 hours, and container unloading is quoted per account.

Frequently Asked Questions

What is first sale for export?

It means valuing imported goods on an earlier sale in the chain, usually the factory's sale to a middleman, instead of the importer's purchase price. CBP accepts it only when the importer documents a bona fide sale, goods clearly destined for the United States, an arm's-length price and the statutory additions.

Does CBP have to approve first sale before an importer uses it?

CBP's guidance has the importer declare the first-sale value itself, after making sure the sale meets the criteria, and be ready to submit the evidence when CBP asks; declaring it without that evidence is not reasonable care. An importer can also request an advance ruling, and the full documentation goes in with the request.

Can first sale be used for goods made in China?

In 2022 the Federal Circuit held in Meyer that the statute gives no basis to consider the effects of a nonmarket economy on transaction value, and that holding still stands; in a related-party chain, what counts is whether the buyer-seller relationship influenced the price. On remand, the trial court entered judgment for the government in June 2026, according to its docket entry on GovInfo; as of October 29, 2026 its opinion was still confidential, so the court's reasons are not public.

Is the "F" first-sale declaration on CBP Form 7501 still required?

No. It covered goods entered from August 20, 2008 through August 19, 2009, and CBP removed it from 19 CFR 141.61 effective December 30, 2010, after its statutory authority expired. CBP's "First Sale Declaration" page still uses the present tense, but the regulation no longer contains it.

What documents does CBP expect for a first-sale claim?

A description of each party's role and a complete paper trail for every sale in the chain: invoices, contracts, purchase orders, proof of payment and shipping documents, with consistent prices, dates, parties and goods. The first sale's statutory additions, such as the middleman's assists to the factory, must be documented too, or that sale cannot be the basis of value.

What if the factory and the middleman are related?

Being related does not rule out first sale, but the price has to pass the related-party test: the relationship did not influence the price, or the price closely approximates a test value. Decisions summarized in CBP's encyclopedia rejected related-party claims when the parent's profit was missing or a transfer pricing study did not cover the relevant period.

Is the Section 301 forced-labor duty charged on the first-sale value?

It is an additional ad valorem rate, 12.5% for products of China outside the listed exemptions since July 24, 2026, so it is a percentage of the appraised value. If CBP accepts a first-sale value for a line, that value is the base; confirm both for each line with your broker.

Final Take

First sale for export rests on statutory words that CBP tried to reread in 2008 and left alone in 2010. What it asks has not moved: a real factory sale, a U.S. destination fixed when the middleman bought, an arm's-length price, the additions, and a file that proves each one.

With duty layers stacked on value, the 2027 contract question is practical: will the middleman show you the factory invoice and its proof of payment, and will your broker and attorney accept the file before the first entry? If not, there is no first sale to declare. Before you rely on Meyer, check the court's slip opinion list for the public version of its June 2026 opinion.