Customs valuation. Last updated: October 27, 2026

Customs value is a legal construct, not an invoice price.

Under 19 U.S.C. §1401a, customs value follows a sequential hierarchy of methods. The sequence is mandatory. Methods are considered in order, not selected at will. This page covers each method as 19 U.S.C. §1401a and 19 C.F.R. Part 152 state it, the additions and exclusions, and the related party rules.

If you need a US Importer of Record

The value declared under 19 U.S.C. §1401a is declared by the Importer of Record (IOR), and the IOR owes the duty on it. A company outside the United States, or a United States buyer that does not want the entry in its own name, can use an independent United States Importer of Record that assumes the role under 19 U.S.C. §1484, with the valuation method structured before importation and the entries filed by licensed customs brokers. Tell us what you import and how your entries are filed today, and we’ll show you where you stand. See if you qualify or read how it works.

The hierarchy

Six methods, considered in this order. Each one applies only when the one before it does not. The order is set by 19 U.S.C. §1401a(a)(1) and repeated in 19 C.F.R. §152.101(b).

Transaction value of the imported merchandise

19 U.S.C. §1401a(b). The price actually paid or payable in a bona fide sale for export to the United States, with the statutory additions.

Transaction value of identical merchandise

19 U.S.C. §1401a(c). The value of identical goods sold for export at about the same time.

Transaction value of similar merchandise

19 U.S.C. §1401a(c). The value of similar goods sold for export at about the same time.

Deductive value

19 U.S.C. §1401a(d). Worked back from the United States resale price, less the statutory deductions.

Computed value

19 U.S.C. §1401a(e). Built up from materials, production, profit, and general expenses.

Fallback method

19 U.S.C. §1401a(f). A reasonable adjustment of the earlier methods when none applies as written.

The only exception is 19 U.S.C. §1401a(a)(2): the importer may ask that computed value be used in place of deductive value, a request made when the entry summary is filed (19 C.F.R. §152.101(c)). The Importer of Record (IOR) declares the value under 19 U.S.C. §1484(a)(1), using reasonable care.

Where most entries stop

Most importers file under transaction value, the price actually paid or payable, and go no further.

Transaction value applies only where there is a bona fide sale for export to the United States: a real sale with commercial substance, transfer of title or risk, and a price actually paid or payable. An internal transfer or a paper invoice between related entities is not automatically a bona fide sale.

Most importers file under transaction value without testing whether it is the correct method for their facts. Where the statute and the facts point to a different step, that step is the correct one.

Transaction value has limits. Under 19 U.S.C. §1401a(b)(2)(A) and 19 C.F.R. §152.103(j)(1), it applies only if all four of these hold:

Restrictions on the buyer’s use or resale are limited to those imposed by law, geographic limits, or restrictions that do not substantially affect value.
The sale or price is not subject to a condition or consideration whose value cannot be determined.
No part of any later resale, disposal, or use accrues to the seller, unless it is added under §1401a(b)(1)(E).
The parties are unrelated, or, if related, the value is acceptable under the related party test.

When one fails, the analysis moves to identical merchandise. The price actually paid or payable is the total direct or indirect payment by the buyer to or for the seller, excluding international transportation and insurance (19 U.S.C. §1401a(b)(4)(A)). Rebates made after importation are disregarded (§1401a(b)(4)(B)).

Additions and exclusions

Transaction value is not simply the invoice figure. The statute requires certain additions, to the extent they are not already in the price and only on sufficient information. Under 19 U.S.C. §1401a(b)(1) they are:

Addition	Authority	What it covers
Packing costs	§1401a(b)(1)(A)	Packing costs incurred by the buyer
Selling commissions	§1401a(b)(1)(B)	Selling commissions incurred by the buyer
Assists	§1401a(b)(1)(C), (h)(1)	Materials, components, tools, dies, molds, consumed materials, and engineering, design, and similar work done outside the United States, supplied by the buyer
Royalties and license fees	§1401a(b)(1)(D)	Amounts the buyer must pay, directly or indirectly, as a condition of the sale for export
Proceeds of resale	§1401a(b)(1)(E)	Any part of later resale, disposal, or use proceeds that accrues to the seller

If sufficient information is not available for an addition, the statute treats transaction value as one that cannot be determined (19 U.S.C. §1401a(b)(1); 19 C.F.R. §152.103(b)(2)).

Assists, royalties

An assist is valued under 19 C.F.R. §152.103(d) at acquisition cost from an unrelated seller or, if the buyer or a related person produced it, production cost, apportioned to the imported goods consistent with generally accepted accounting principles (§152.103(e)). Whether a royalty is dutiable depends on whether it was a condition of the sale for export (§152.103(f)). Patent royalties for processes used to make the goods are generally dutiable; royalties for United States use of a copyright or trademark generally are not.

Non-dutiable costs

The statute and the facts may also support exclusion of cost elements that are not part of dutiable value. Under 19 U.S.C. §1401a(b)(3) and 19 C.F.R. §152.103(i), these are excluded if they are separately identified:

Reasonable costs of construction, erection, assembly, maintenance, or technical assistance after importation, and transportation after importation.
United States customs duties and other federal taxes payable because of importation, and federal excise taxes that United States vendors ordinarily bear.

Foreign inland freight follows 19 C.F.R. §152.103(a)(5), with a through bill of lading as the usual proof. Whether an exclusion applies is fact specific and depends on documentation.

Related party transactions

Related parties are defined in 19 U.S.C. §1401a(g)(1) and include officers and directors, partners, employers and employees, holders of five percent or more of an organization’s voting stock, and persons under common control. Under 19 U.S.C. §1401a(b)(2)(B) and 19 C.F.R. §152.103(j)(2), the price between related parties is accepted as transaction value if either the relationship did not influence the price, or the transaction value closely approximates one of the test values: the transaction value of identical or similar merchandise sold to unrelated buyers in the United States, or the deductive or computed value of identical or similar merchandise.

Section 152.103(l) gives indicators that the relationship did not influence the price: the parties deal as if unrelated, the price follows industry practice or the seller’s pricing to unrelated buyers, or the price recovers all costs plus a typical overall profit. If CBP intends to reject a declared value in a way that would increase duties, §152.103(m) requires it to state the grounds and allows the importer 20 days to respond in writing.

The later methods in order

Identical and similar merchandise. Under 19 U.S.C. §1401a(c) and 19 C.F.R. §152.104, the value is the accepted transaction value of identical or similar merchandise exported at or about the same time, at the same commercial level and in about the same quantity, adjusted on sufficient information. Where more than one value results, the lowest is used.

Deductive value. Under 19 U.S.C. §1401a(d) and 19 C.F.R. §152.105, the starting point is the unit price at which the goods are sold in the United States in the greatest aggregate quantity, at or about importation or within 90 days after it. The statute deducts usual commissions or profit and general expenses, transportation and insurance, and duties and federal taxes payable because of importation.

Computed value. Under 19 U.S.C. §1401a(e) and 19 C.F.R. §152.106, computed value is the cost or value of materials and fabrication, profit and general expenses equal to what producers in the exporting country usually reflect in sales to the United States, any assist not already counted, and packing costs.

Fallback method. Under 19 U.S.C. §1401a(f) and 19 C.F.R. §152.107, value is derived from the earlier methods, reasonably adjusted, using only information available in the United States. The earlier methods’ timing and sourcing requirements may be applied flexibly. Under 19 U.S.C. §1401a(f)(2) and 19 C.F.R. §152.108, appraisement may not rest on the United States price of domestic goods, the higher of two values, home market prices, minimum values, or arbitrary or fictitious values.

What lawful tariff engineering means

Structuring imports before they arrive so that the duty result follows from truthful classification and correct valuation.

The Supreme Court has recognized the doctrine since Merritt v. Welsh (1882), on the condition that the merchandise is truthfully presented and classified in its actual condition at importation. Later decisions including Hartranft v. Wiegmann (1887), Falk v. Robertson (1890), and Patton v. United States (1895) develop the same line.

Three conditions apply without exception:

Done before import

Not corrected afterward.

Fully documented

Contemporaneous documentation, created at or near the time of the transaction.

Based on real commercial conditions

Substance over form. The economic reality has to match the paperwork.

This is the statute applied as written.

What CBP actually audits

CBP audits documentation, not explanations. Entries draw scrutiny from inconsistency, missing documentation, and improper valuation methodology. A file that is consistent, complete, and methodologically sound is the objective. Contemporaneous documentation carries more evidentiary weight than an after the fact explanation. Records must be retained for five years from the date of entry under 19 C.F.R. §163.4.

Valuation in the 2026 duty environment

Valuation now carries more weight in sectors where duties are assessed on the full customs value. Proclamation 11021 of April 2, 2026 (91 FR 18201) provides that Section 232 duties on steel, aluminum, and copper articles apply to the full customs value of the imported product, regardless of metal content, for goods entered on or after 12:01 a.m. Eastern Daylight Time on April 6, 2026. For steel and aluminum importers, and oil and gas equipment importers in the derivative scope, every addition and exclusion changes the number on which duty is calculated. Pharmaceutical duties under Proclamation 11020 have applied to all companies since September 29, 2026.

The IOR declares the value. Executive Order 14411 (91 FR 35125) is in rulemaking on asset, bonding, and vetting requirements; the tracker records the dated position of each directive. The valuation hierarchy is statutory.

Whether any of this applies to you

It is fact specific. Applicability depends on whether a bona fide sale exists, the product category and its regulatory oversight, and whether comparable data is available to support a later step in the hierarchy.

Every implementation is evaluated case by case, structured before importation, and documented against the specific product and transaction.

This work is performed by the Importer of Record provider, described on our Disclosures page. Hamburg Logistics does not provide customs, legal, or valuation advice.

Ask about customs valuation

Frequently asked questions

What is 19 U.S.C. §1401a?

It is the statute that sets the customs value of imported merchandise. It establishes six methods of appraisement in a fixed order and defines transaction value, its additions and exclusions, related persons, and assists.

Is customs value the same as the invoice price?

No. Transaction value starts from the price actually paid or payable, is increased by packing costs, selling commissions, assists, certain royalties, and resale proceeds that accrue to the seller, and excludes international freight and insurance and separately identified post-importation services and duties.

Can CBP reject the price between related companies?

Yes. A related party price is accepted only if the relationship did not influence the price or the value closely approximates a test value. If CBP intends to reject a value in a way that would increase duties, 19 C.F.R. §152.103(m) requires it to state its grounds and give the importer 20 days to respond in writing.

Who declares the customs value on an entry?

The Importer of Record. Under 19 U.S.C. §1484(a)(1), the entry is completed by filing the declared value, classification, and rate of duty, and the party making entry acts using reasonable care. A licensed customs broker files the entry under a power of attorney.

How long are valuation records kept?

Five years from the date of entry for entry-related records, under 19 C.F.R. §163.4.

Sources

This page summarizes publicly available federal actions for general information. It is not legal advice. Requirements are subject to rulemaking and change. Verify current requirements against the Federal Register and CBP guidance.

See if you qualify

Tell us what you import and how your entries are filed today, and we’ll show you where you stand.

See if you qualify