Use the first sale in a multi-tiered transaction to lower your dutiable value and pay less in import duties.
In a typical three-party supply chain—manufacturer, middleman, importer—U.S. customs normally assesses duties on the price the importer pays to the middleman. The first sale rule lets you substitute the lower manufacturer-to-middleman price as the declared value, since that earlier transaction is still a bona fide sale for export to the U.S.
To qualify, the first sale must be an arm's-length transaction between unrelated parties, with the goods clearly destined for export to the United States at the time of sale. The importer bears the burden of proof and must maintain detailed documentation including factory invoices, purchase orders, and shipping records that link the first sale to the eventual import entry.
Start by mapping your complete supply chain to identify qualifying multi-tiered transactions. Work with your middleman to obtain factory invoices and establish documentation protocols. Many importers engage a customs attorney to review their first sale program before filing, as CBP scrutinizes these claims carefully during audits.
The first sale rule allows importers to declare the value of goods based on the earliest qualifying sale in a multi-tiered supply chain, rather than the last sale before importation. This typically means using the factory-to-middleman price instead of the middleman-to-importer price.
Importers who purchase goods through an intermediary (trading company, buying agent, or distributor) where there are at least two arm's-length transactions before the goods enter the U.S. The first sale must be a bona fide sale destined for export to the United States.
Savings depend on the markup between the first and last sale. Typically, the first sale price is 15-30% lower than the transaction value, which directly reduces the duty owed by that same percentage.
You need the manufacturer's invoice to the middleman, proof the goods were destined for U.S. export at the time of the first sale, evidence the first sale was arm's-length, and a detailed audit trail linking the first sale to your import entry.
Yes. CBP can request documentation to verify the first sale was a legitimate arm's-length transaction destined for U.S. export. Maintaining thorough records including contracts, invoices, and payment evidence is critical to defending your valuation.
MarginHub identifies which products in your catalog qualify for first sale valuation and estimates your potential duty savings.
Get Started Free