Newly introduced bipartisan legislation aims to address the widespread use of a 37-year-old customs provision currently being leveraged by importers looking for relief from the weight of President Donald Trump’s tariffs.
Senators Sheldon Whitehouse (D-R.I.) and Bill Cassidy (R-La.) introduced the Last Sale Valuation Act on Wednesday with the goal of doing away with a law that allows importers to declare the value of an import based on the first sale in a multi-tiered supply chain—like the sale of a T-shirt to a middleman—rather than the final commercial price paid by the importer.
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The “first sale” rule gives them the ability to pay duties on the lower valuation of the product in question, instead of seeing tariffs assessed on the cost of goods to the importer. According to the lawmakers, the “loophole” in trade policy amounts to a legal form of duty evasion, as it allows importers to declare an “artificially low” value on goods.
“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 the proposal, the transaction value would be determined based on the last (rather than the first) sale of merchandise that takes place before it is exported to the United States—a change the legislators said would guarantee that the tariff valuation reflects the transaction between the offshore seller and the American importer.
Proponents of domestic industry and trade groups focused on U.S. manufacturing are endorsing the measure.
“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.
National Council of Textile Organizations (NCTO) president and CEO Kim Glas said the group strongly supports the Last Sale Valuation Act, as the first sale rule currently in place “significantly lowers duties paid by importers on textile and apparel goods and disadvantages U.S. textile manufacturers in favor of countries that often employ predatory trade practices and fail to provide reciprocal market access.”
“We were pleased to see that Senators Cassidy and White House introduced a bipartisan measure that would end first sale, because it really is a trade loophole that is utilized by importers to pay less tariffs, and it’s very open to manipulation,” Glas told Sourcing Journal. “We’re one of the few countries that has a first sale regime for tariff structure versus last sale,” she explained.
According to Glas, goods often go through multiple transactions in the importation process, and allowing importers to pay duties only on the first sale of goods by a factory in Bangladesh to an intermediary, for example, amounts to “a manipulation” of the system, even though it’s “a legal construct that allows for this to happen.”
There are several practical implications of tariffs being assessed on a first-sale basis, she added. “It undermines our free trade agreements in the Western Hemisphere, where you get duty free treatment for qualified trade,” she said. Import market share for textile and apparel products from the hemisphere has dropped from 12 percent to 8 percent, while 92 percent of such imports originate in Southeast Asia or China.
“You could call any importer today they know about first sale, especially those who are brokers. It’s widely and heavily utilized,” Glas added, noting that the reciprocal tariffs have prompted importers to look for workarounds or cost-mitigation strategies. The rule was utilized over previous years—decades, in fact—”but now it’s hyper-charged in this environment.”
First sale gives offshore exporters an advantage in terms of tariff burden, lowering costs for importers and potentially causing them to pull business away from producers in the Americas, she believes. “If you don’t think that these damaging loopholes have a severe impact to the industry—absolutely, for one cent savings per garment, someone will move [sourcing] to some other part of the world.”
“That’s why it’s important that Congress take action on this, and that the administration looks at all their levers for mitigating this risk, because it’s having a real world impact on the domestic textile industry,” Glas added. “It’s also a work around to what the Trump administration’s plans have been to hold trade predators accountable, help build revenue for the U.S. Treasury, help stabilize the manufacturing industry and onshore more production.”
Groups representing brands and retailers that import finished goods, however, believe the rule could have adverse impacts on commerce and consumers.
“‘Last Sale’ approach puts America last, making it more expensive for Americans to get dressed every day while dismantling a widely used and long-standing program to ensure supply chain transparency, American competitiveness, and customs compliance. Our country cannot afford to jettison the well-established First Sale Doctrine, which was created by Congress and reaffirmed by the courts, so that tariffs are correctly assessed on the actual, and not marked up, value of U.S. imports,” said Steve Lamar, CEO and president of the American Apparel and Footwear Association.
“At a time of high tariff costs and chaos, we should be looking for ways to bring more relief and predictability into U.S. trade policy. The First Sale doctrine does just that. We look forward to working with Congress and all stakeholders to ensure the First Sale Doctrine remains a potent and viable tool, and that it continues to be fairly and fully enforced,” he added.
Senators Whitehouse and Cassidy aren’t strangers to trade policy reform efforts. They previously introduced the Customs Modernization Act in 2023 with the goal of upping U.S. Customs and Border Protection’s visibility into international supply chains to bolster information sharing, improve the use of trade data and provide better enforcement.
They also co-authored the Manifest Modernization Act last year to take on the importation of counterfeit goods and other products deemed unsafe for consumers. The bill addressed trade-based money laundering, illicit finance, forced labor and sanctions evasion. Whitehouse’s Protecting American Industry and Labor from International Trade Crimes Act, introduced in 2025, seeks to empower the Department of Justice to investigate and prosecute trade-related crimes. Whitehouse and other lawmakers also introduced the Closing the De Minimis Loophole Act to put an end to the de minimis exemption.
