Legislation aims to restore fair customs valuation, strengthen U.S. trade enforcement

Washington, DC - U.S. Senators Sheldon Whitehouse (D-RI) and Bill Cassidy (R-LA) today introduced the Last Sale Valuation Act, bipartisan legislation to close a customs loophole allowing importers to avoid duties by declaring an artificially low value for their goods. This fix will level the playing field for small and domestic businesses and combat trade-based money laundering.

"Multinational corporations and bad actors shouldn't be able to fill their coffers by exploiting loopholes that give them an unfair advantage over small businesses," said Whitehouse. "Closing the 'first sale' loophole will boost businesses that play by the rules, while helping law enforcement crack down on illicit trade."

Under current law, importers can declare the value of an imported good based on the first sale in a multi-tier supply chain - which could be an offshore intra-company transfer - rather than the true commercial price paid by the U.S. buyer. The "first sale" loophole has long incentivized large multinational companies to report artificially low values for duty assessment and, in some cases, allowed bad actors to conceal illicit funds within legitimate trade flows.

The Last Sale Valuation Act closes this loophole by requiring that transaction value be determined based on "the last sale of the merchandise occurring before exportation to the United States." This ensures that valuation reflects the bona fide transaction between the foreign seller and the U.S. importer - the point at which the goods are destined for entry into U.S. commerce.

This legislation is endorsed by the Rhode Island Textile Innovation Network, the National Council of Textile Organizations, Rethink Trade, and Coalition for a Prosperous America.

"This legislation is another important step in closing tariff loopholes that have put our Rhode Island textile companies - and all US manufacturing companies - at a serious disadvantage to low-wage, government-subsidized overseas competitors. Kudos to Senator Whitehouse and Senator Cassidy for helping to level the playing field," said Michael Woody, founding chair of the Rhode Island Textile Innovation Network.

Senators Whitehouse and Cassidy previously introduced the bipartisan Customs Modernization Act, legislation to increase U.S. Customs and Border Protection's visibility into international supply chains to resolve data collection constraints, expand the legal use of trade data, improve enforcement effectiveness, and bolster information sharing among government agencies. Last year, Whitehouse introduced the Closing the De Minimis Loophole Act to end the "de minimis" exemption and protect the competitiveness of American manufactures, which was enacted into law. Whitehouse and Cassidy also introduced the Manifest Modernization Act to combat imports of unsafe, illegal, and counterfeit goods, trade-based money laundering, illicit finance, forced labor, and sanctions evasion. Whitehouse additionally introduced the bipartisan Protecting American Industry and Labor from International Trade Crimes Act, legislation to strengthen the Department of Justice's ability to investigate and prosecute trade-related crimes.

The full test of the bill is available here.