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Railway crane, Qingdao City, Shandong Province, China’s Qingdao port transports goods in the cargo courtyard of the Qianwan United container terminal.
Nurphoto | Getty pictures
Enterprises use a ten-year-old legislation known as the “first sales rule”, they find a job to minimize the most important stroke from tariffs.
The first sales procedure within the US Customs Law allows US importers to use the first sale price in a number of operations to calculate customs duties.
For example, the Chinese manufacturer sells a Hong Kong dealer for $ 5. This Hong Kong seller then sells the shirt to the US retailer for $ 10. The US retail seller then sells shirts for consumers for $ 40.
With the first sales procedure, the US retailer may pay the seller $ 10, more than $ 10, more than $ 5 costs, thus violating the value of mediation related to profitability.
“The rules that allow you to determine the final task of the factory, the seller from the factory to determine the final task price from the factory,” Brian Gleicher, Member and Miller & Chevalier told CNBC.
How does it work
The first sales procedure has been around since 1988, but the first administration of the US President Donald Trump and now the most recent tariff regime has been focused.
“In the event of 25% of the first leadership (in China in 2018), when we started receiving a call, the rules of sale again with new tariffs began to re-emerge,” he said.
Everyone begins to investigate with more interest.
Brian same
Members in the Great Lawyer and Miller & Chevalier
“It’s been a very long time, but everyone begins to investigate with more interest,” Gleicher said.
Here the criteria should be done to apply the rules of enterprises:
- At least two sales, one of one producer from abroad and one or more intermediaries
- Sales should be carried in length by independent and completely unrelated parties
- Should just prove that matter is intended for the United States instead of finishing there
- Must be documenting the first sales price
For some companies, this can be easier.
Typically, the standard task of the US customs is based on the import price of one of the best, bringing the burden of evidence to the importer to demonstrate the initial cost of this article. This can not always be a seller of a seller.
“If you are an importer, you should get the first selling price. You must have information” said Gleicher. “Sellers do not want to provide this information.”
Rich Taylor in China Hub Ningbo, which has the first sale procedure for the first sales procedure for the first time of Trump, said that due to the risks.
However, additional complexities may be valuable, taking into account the potential value savings.
“You (Suppliers) keep your customer. They show that you are trying to give them every vehicle to reduce their costs,” Taylor said.
“If you don’t use it, the last value will rise up. And if your opponent uses (first sales) rule, he will prefer them.”
Who uses?
Companies are becoming this.
Although the first sales procedure is widely used among products and industries, it is also useful in higher valuable consumer goods and luxury products.
Last month, Italian luxury fashion brand Moncler Noted the first sales rule to assess the “significant benefit”.
Industrial value … Lower than retail price … it has an important benefit.
Luciano Santel
Executive Director and General Corporate and Supply Officer at MonCler
“First cost (sales), industrial cost, industrial value … Retail price is significantly lower and the price of the interchance is, of course, the CEO of Of course, the CEO and the CEO of CEO and the CEO of the CEO and the CEO of Executive and General.
Swiss headquarters Biotech Kuros Kuros Biosinsence has changed its operations that allow you to adopt the first sales policy this month ago.
“What will we do now, as a wholesale center between Zurich … we can adapt the first sales method as a basis,” Daniel Geiger, Chief Executive of the Swiss Headquarters Which pharmacistHe said during a profit call on May 13.
Earning calls in the first quarter, US BBQ-Maker Traik And the manufacturing firm FICTIV has also purchased its first purchase as “Supply Chaints” and means “minimize tariff and duty costs.
In perfect legal cases, use the first sales procedure, however, the growing rates of the rough management can increase the efforts to increase the growth and production of production.
The White House did not respond to CNBC to interpret the effects of the first sales rule and the effects of tariff policy.
US Customs and Border Protection, said that importers could not report the final use of the first sales rule.
– CNBC’s Ganesh Rao contributed to this report.
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