Latest news with #importDuties
South China Morning Post
3 days ago
- Business
- South China Morning Post
US retail giants pushing Chinese suppliers to shoulder up to 66% of tariff costs
American retail giants are now demanding that their Chinese suppliers shoulder half to 66 per cent of the cost of US import duties, as the ongoing US-China trade war ramps up pressure on businesses' bottom lines, industry sources told the Post. Advertisement US retailers have been locked in talks with Chinese producers for weeks over how to handle the additional costs caused by the trade war, with the firms facing intense political pressure at home to ' eat the tariffs ' and keep prices stable. Walmart and other major US retail groups previously agreed to bear the full cost of the tariffs when they asked their Chinese suppliers to resume shipments in late April, industry sources told the Post at the time But global brands including several US retail giants are now pushing suppliers in both China and parts of Southeast Asia to absorb a large chunk of the cost of the levies, according to sources from suppliers serving companies including Walmart, Target, Nike, Puma and Adidas. 'Most of our customers, the garment vendors exporting to major retailers and brands, are being asked to cover 50 to 66 per cent of the current tariffs,' said an executive at a fashion supplier, which produces and sources from China and Southeast Asia and then sells across the United States and Europe. Advertisement The negotiations remain fluid and the details of how the tariff costs will be divided have not yet been finalised, the sources stressed, as both sides remain in constant contact as they try to navigate a 'tough time' for the industry.
Entrepreneur
5 days ago
- 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.
