U.S. Importers Should Reevaluate "First Sale" Customs Programs

On March 1, 2021, the U.S. Court of International Trade (CIT) issued a decision with important ramifications for any company that uses "first sale" to reduce customs duty liability for goods imported into the United States. The CIT's ruling in Meyer Corp., U.S. v. United States calls into question the continued viability of first sale for suppliers located in non-market economies. This development has meaningfully altered the risk profile associated with using first sale for transactions in China and Vietnam. All companies relying on first sale should review their first sale programs to evaluate the impact of this ruling and take adequate precautions.

The First Sale Rule

The first sale rule permits importers to declare a lower customs value-and by extension, to lower the customs duty liability-for certain types of qualifying importations. To be eligible, an importation must involve a multi-tiered transaction (i.e., there must be three or more parties involved in