Latest news with #customsLaw
Yahoo
05-07-2025
- Business
- Yahoo
De minimis exemption slated to end in 2027
This story was originally published on Supply Chain Dive. To receive daily news and insights, subscribe to our free daily Supply Chain Dive newsletter. The de minimis exemption will be eliminated in two years after President Donald Trump signed a sweeping policy bill into law on Friday. As part of the package introduced as the 'One Big Beautiful Bill Act,' the U.S. will repeal the exemption allowing imports under $800 to enter the country duty and tax free, effective July 1, 2027. Exemptions will remain in place for eligible items bought during travel and bona fide gifts from foreign citizens to U.S. residents. The bill also establishes a civil penalty, starting 30 days after its enactment, for any person attempting to use de minimis entry in a way that "violates any other provision of" U.S. customs law. The amount is $5,000 for the first violation and up to $10,000 for subsequent violations. The move builds upon the Trump administration's efforts to restrict the de minimis exemption, which lawmakers and customs officials have scrutinized in recent years due to contraband entering the U.S. via low-cost packages. Earlier this year, the White House removed the exemption for imports from China and Hong Kong and announced its plans to end de minimis for other countries once systems are in place to collect duty revenue. The vast majority of de minimis volume entering the U.S. originated from China prior to the May 2 ban, making up 76% of shipments in Custom and Border Protection's 2024 fiscal year. The full repeal of the exemption in two years would expose low-cost shipments from Canada, Mexico and other countries to tariffs and other import taxes. E-commerce companies like Shein and Temu have historically benefited from the exemption, which allows them to ship products made internationally direct to U.S. consumers without facing added duties. Some experts say de minimis-reliant supply chains will shift to more traditional bulk shipping models or expanded U.S. fulfillment operations due to policy changes by the Trump administration. Recommended Reading De minimis' future: 4 questions shippers should consider Sign in to access your portfolio
Entrepreneur
28-05-2025
- Business
- Entrepreneur
Understanding the First Sale Rule in U.S. Customs Law
The first sale rule is a significant provision in U.S. customs law, offering importers a strategic advantage when calculating duties on imported goods. This legal concept allows businesses to base... This story originally appeared on Due The first sale rule is a significant provision in U.S. customs law, offering importers a strategic advantage when calculating duties on imported goods. This legal concept allows businesses to base their duty calculations on the lowest cost of goods in a multi-tiered transaction, potentially resulting in substantial savings for companies engaged in international trade. Under standard customs procedures, importers typically pay duties based on the price they pay to acquire goods from foreign suppliers. However, the first sale rule creates an alternative pathway to reduce these costs in specific supply chain structures significantly. How the First Sale Rule Works The rule applies to multi-tiered transaction chains where goods change hands multiple times before reaching the U.S. importer. In such scenarios, the rule permits importers to calculate duties based on the 'first sale' price—the amount paid in the initial transaction between the manufacturer and the middleman—rather than the higher price paid by the U.S. importer to the middleman. For example, if a manufacturer in Asia sells products to a trading company for $80 per unit, and that trading company then sells to a U.S. importer for $100 per unit, the first sale rule would allow duties to be calculated on the $80 price rather than the $100 price. This calculation method can create significant savings, especially for high-volume importers or those dealing with products with higher duty rates. Requirements for Using the First Sale Rule Importers seeking to take advantage of this provision must meet several key requirements: The initial sale must be a genuine 'arm's length transaction' between unrelated parties The goods must be destined for export to the United States at the time of the first sale The importer must maintain detailed documentation proving the transaction values The middleman must act as more than just a paper company, adding real value to the transaction Customs authorities scrutinize first sale claims, requiring importers to provide substantial evidence supporting their valuation method. This typically includes sales contracts, purchase orders, invoices, proof of payment, and other documentation establishing the legitimacy of the transaction chain. Strategic Importance for Importers The first sale rule represents a valuable duty-saving opportunity for businesses with complex global supply chains. When properly implemented, this strategy can reduce customs costs by 10-20% or more for companies importing high-duty items or dealing in large volumes. The savings can be dramatic,' notes one trade attorney who regularly advises clients on customs matters. For companies importing millions of dollars in goods annually, even a slight percentage reduction in duty rates translates to a substantial bottom-line impact. The rule has gained increased attention recently as tariff rates have risen on many products, particularly those from China. As companies face growing pressure to control supply chain costs, customs strategies like the first sale rule have become more central to financial planning. Despite its advantages, the first sale rule remains underutilized by many importers due to its documentation requirements and the need for careful supply chain structuring. Companies considering this approach should work with customs experts to ensure compliance with all regulatory requirements while maximizing potential savings. The post Understanding the First Sale Rule in U.S. Customs Law appeared first on Due.
