It is a totally legal rule, which could undermine Donald Trump’s efforts to improve customs tasks. In force since the late 1980s, but relatively little known so far, the “rule of the first sale” (first sale rule) makes it possible to calculate customs tasks with the lowest cost of a product.
The American Media CNBC takes the example of a shirt made in China: sold in an intermediary in Hong Kong for $ 5, then it is sold to an American retailer for 10 dollars, which will place it on the US shelves at 40 dollars. According to the rule of the first sale, the retailer can pay the import tariffs of the initial price of $ 5 and not over the price of 10 dollars.
On site, American customs indicates that the declaration of importers is related to the price paid by the buyer “during a sale before the last sale before the introduction of goods in the United States.”
CNBC specifies that this mechanism must meet four criteria: a first documented sale price, proof that the item is specifically allocated to the US market, a minimum of two sales, including a foreign producer and at least one intermediary, “complete competition conditions”, namely that the different parts must be independent.
The US media had revealed a few days ago the existence of a cunning used by Chinese exporters to escape customs tasks, depending on regulations, provided that the seller solves customs tasks and underestimating the value of goods.
Counteract Trump’s effect
It would greatly reduce the amount of customs duties decided by the Trump administration, since these amounts would be based on much lower costs than those paid by importers.
This mechanism would be particularly interesting for luxury sectors or high -value products, for which margins are often more important.
A blessing for many companies that already say they take advantage of it. This is the case of the Italian luxury brand Moncler, the Swiss Biotechnology Company Kuros Biosciences or the US company bring that it sells barbecues.
If this rule is sometimes complex to establish numerous consulting companies that specialize in import-export face an influx of requests from US and international companies to benefit from these customs duties.
However, the use of this perfectly legal rule could compromise the efforts of the Trump administration to increase customs income and promote the relocation of production, US media say.
Questioned by CNBC, the White House refused to comment. As for American customs, they did not want to transmit recent data on the use of this mechanism by importers, to measure a possible increase.
Source: BFM TV
