Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
The railway crane transports goods in the car court of the Qianwan United Container Port Qingdao in Tsingao, Shandun province, China.
Nurphoto | Gets the image
Enterprises find a decision to minimize the most significant blow to tariffs, using decades of legislation known as the “first sale rule”.
As part of the US Customs Law, the first sale rule allows us to import the price of the first sale in a number of transactions to calculate customs duties.
For example, the Chinese manufacturer sells a Hong Kong T -shirt for $ 5. Then Hong Kong’s supplier sells a $ 10 T -shirt. The fact that the American retailer sells a T -shirt for $ 40.
According to the first sale rules, the US retailer can pay import duties at the initial price of $ 5 in favor, not overpriced suppliers of $ 10, which deprived the cost of the intermediary.
“What you are allowed to do is use the initial sales price from the plant to the provider to determine the final duty price,” said Brian Glaicher, the senior lawyer and Miller & Chevalier Chartered, said CNBC by phone.
As it works
The first sale rule has existed since 1988, but has attracted attention to the first US Presidential Administration Donald Trump and now, during its last tariff regime.
“If the first administration had 25% of the tariffs (in China in 2018), it was then that we started calling. Now with new tariffs, the first sale rule began to come out again,” the video call said.
Everyone starts exploring it with greater interest.
Brian is the same
Senior lawyer and member Miller & Chevalier Chartered
“It was a very long time, but … Everyone starts studying it with greater interest,” Glaicher said.
Here are the criteria that businesses must fulfill to apply the rule:
- Participants must be at least two sales: one of the foreign producer and one or more of the mediator
- Sales must be carried over the length of the independent and unrelated parties
- Should be proof that this subject has been intended for the US and not just end there
- Should be the documentation of the first sale price
For some companies, it can be easier to say than to do.
Usually, the default duty imposed by the US customs, based on the price of good imports, investing on the importer’s load to demonstrate the original cost of this item. It may not always be something that the supplier is ready to reveal.
“If you are an importer, you need to get this first sale price. You need to have data,” said Glaicher. “Sellers may not want to give this information.”
Rich Taylor, Corporate Business Development Consultant, based in Chinese Hub Ningbo, who advised Fortune 500 in the first rule of sale from the moment of Trump, noted that “there must be a level of trust between all parties” from the risks.
However, additional difficulties can be useful, given the potential cost savings.
“You (suppliers) Keep the customer. You show them that you are trying to give them every tool to reduce their cost,” Taylor said.
“If you do not use it, then the cost of the final cost will rise. And if your competitor uses the rule (first sale) then you are going to lose this preference over them.”
Who uses it?
Companies seem to put it into it.
While the first sale rule is widely used in various products and industries, it is considered especially useful for higher prices of consumer goods and luxury products where the margin is greater.
Last month Italian luxury fashion brand Manicler He designated the first sale rule as a “significant benefit” of its costs.
Industrial costs … much lower than retail … This is a significant benefit.
Lucian Santel
Executive Director and Corporation Chief Officer and Delivery to Moncler
“The first cost (sale), of course, industrial costs … much lower than the retail price, and it is about 50% of the cost of the interfaith company. So, of course, this is a significant benefit,” said Lucian Santel, Executive Director and Chief Corporate Director and Director for Moncler supplies during the call on April 16.
Earlier this month, Biotech Kuros Biotech with a headquarters with a headquarters stated that it changes its activity, which would allow it to accept the first sale policy.
“What we do now is to switch between Zurich as wholesale … What is essentially In which bosciennessaid during the call for profit on May 13.
During the call calls in the first quarter American barbecue manufacturer Traier And the Fictiv production firm also called the first sale as “chain chain” and means “minimize tariff and duty expenses” respectively.
The use of the first sale rule, although quite legitimate, can nevertheless undermine the efforts of the Trump administration to increase tariff revenue and increase production.
The White House did not respond to the CNBC request for a commentary on the first sale rule and its consequences for the tariff policy.
The US Customs and Border Protection said they could not provide data on recent use by importers.
– Ganesh Rao to CNBC contributed to this report.
