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[ROUNDUP] What Congress’s “Last Sale” Move Means for Importers with Mollie Sitkowski

February 16
22 mins

Episode Description

Host: Annik Sobing
Guest: Mollie Sitkowski
Published: February 2026
Length: ~25 minutes
Presented by: Global Training Center

First Sale Under Fire: What Importers Need to Know Now

In this Simply Trade Roundup, Annik sits down with trade attorney Mollie Sitkowski to unpack one of the hottest topics in customs right now: first sale and the new Senate proposal that could effectively eliminate it. Recorded on President’s Day, this episode breaks down—in normal language—what first sale is, why it became a go‑to mitigation tool after 2018, and what it would mean for importers if Congress redefines “sold for exportation” to a strict last‑sale rule.

What You’ll Learn in This Episode

  • 2026 so far in trade

    • Why January felt strangely calm, and how February “flipped the switch” back into high gear for the trade community.

  • First sale 101 (plain English)

    • How multi‑tier transactions work: manufacturer → middleman (e.g., Hong Kong parent) → U.S. importer.

    • The valuation statute 19 USC 1401a (transaction value: price paid or payable when sold for exportation to the U.S.).

    • The key question: is the sale “for exportation” at the manufacturer → middleman stage, or at the middleman → importer stage?

    • The Nissho Iwai court decision (1990s) that allowed use of the manufacturer price as the dutiable value if:

      • The goods were clearly destined for the U.S. (through waybills, U.S. labeling/marking, etc.).

      • There was a bona fide sale between manufacturer and middleman (title/risk of loss, inventory, not just a flash pass‑through).

  • Why first sale became so important

    • Before 2018, first sale was mostly used in textiles with high duty rates.

    • After the first round of Trump tariffs (301, 232, etc.), almost all of Mollie’s China import clients started using or exploring first sale—because you can’t control the HTS list or which country is targeted next, but you can control value.

    • One client even called it “bulletproof mitigation” (with Mollie’s caveat: nothing is bulletproof in this environment).

  • Global context and earlier attempts to limit first sale

    • 2007–2008: WTO/GATT valuation guidance interpreting “sold for exportation” as the last sale before import, and how most countries followed that reading.

    • U.S. Customs tried to adopt that approach; the trade community pushed back; Congress stepped in and reaffirmed both the statute and court precedent—Customs cannot unilaterally change 1401a.

  • The new Senate bill: “last sale” language

    • Senators Cassidy and Whitehouse have introduced a bill to amend 19 USC 1401a and define the sale for exportation in two ways:

      • For a single sale: the price paid by the buyer in the U.S. to a foreign seller.

      • For a series of sales: the last sale that introduces the merchandise into the U.S.(i.e., the middleman → U.S. importer transaction).

    • Practical effect: if passed, first sale is gone; only the last sale price would be acceptable for transaction value.

  • What this means for importers

    • Loss of a key, long‑standing legal mitigation tool—importers still pay duties today under first sale; they just pay on a lower manufacturer value instead of the higher middleman price.

    • Many middleman markups are 5% or more—significant when base duties are 20%+ on broad product ranges.

    • Large operational effort:

      • Reversing all the work done to implement first sale (data feeds, documentation, control processes).

      • Changing what gets sent to brokers (switching from manufacturer invoices back to middleman/transfer price invoices).

      • Reworking internal communication among customs, finance, accounting, tax, sourcing, and IT.

    • Likely pressure to raise prices and/or re‑evaluate sourcing—but with the reminder that sourcing shifts are risky when tariff policy can change by tweet or Truth Social post.

  • Why the government cares about eliminating first sale

    • When headquarters/middlemen are outside the U.S. in low‑tax jurisdictions, profit resides offshore.

    • First sale lets importers avoid paying customs duties on that offshore markup, so the U.S. loses both tax revenue and potential duty revenue.

    • The bill’s stated goals: increase customs revenue, strengthen tariff enforcement, and “simplify” CBP oversight by avoiding upstream pricing debates.

  • What you can do now

    • This is a congressional process, not just an agency policy shift—your senators and representatives will vote.

    • Mollie’s advice:

      • Educate your leadership about how much you save through first sale and what losing it would cost (duties, margins, jobs, pricing).

      • Reach out to congressional offices in your district/state and explain real‑world impacts on your business and employees.

      • Use this moment like 2007–2008, when trade community pushback and congressional action kept first sale alive.

  • Looking ahead

    • If the bill passes, importers will have to:

      • Stop using first sale and revert to last‑sale valuation.

      • Rebuild systems and procedures to align with the new statute.

      • Prepare for increased duty spend and strategy shifts (pricing, sourcing, cost absorption).

    • If it doesn’t, expect continued scrutiny and heavy documentation requirements for anyone using first sale.

Presented by: Global Training Center​

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