CUSTOMS VALUATION | 2026-09-27

Customs Valuation Basics: How CBP Values Your Goods Under 19 U.S.C. § 1401a

Duties are a percentage of value, so how CBP values your imports matters as much as the tariff rate — here are the methods, the additions that trip importers up, and how to get it right.

Most U.S. duties are ad valorem, so the customs value is half of the duty equation. 19 U.S.C. § 1401a sets a mandatory hierarchy of valuation methods, starting with transaction value — the price actually paid or payable, plus certain additions.

You can classify a product perfectly and still overpay or underpay duty if the value is wrong. Because most U.S. duties are a percentage of value, customs valuation is half of what you owe.

The Valuation Hierarchy (in Order)

Section 1401a requires CBP to use the first method that applies:

  • Transaction value — the price actually paid or payable for the goods when sold for export to the U.S., plus statutory additions.
  • Transaction value of identical merchandise.
  • Transaction value of similar merchandise.
  • Deductive value — derived from the U.S. resale price, minus certain elements.
  • Computed value — built up from the cost of materials, processing, profit, and general expenses.
  • Fallback method — a reasonable adjustment of the above when none can be used.

Transaction Value: The Additions That Trip Importers Up

When transaction value applies, several amounts must be added to the price paid or payable, to the extent not already included:

  • Packing costs incurred by the buyer.
  • Selling commissions incurred by the buyer.
  • Assists — the value of materials, tools, dies, molds, or engineering/design work the buyer provides to the producer free or at reduced cost.
  • Royalties and license fees the buyer must pay as a condition of sale.
  • Proceeds of any subsequent resale that accrue to the seller.

Omitting assists or royalties is one of the most common valuation errors CBP finds on audit.

When Transaction Value Cannot Be Used

Transaction value may be unavailable — for example, where there is no bona fide sale for export, or where the buyer and seller are related and the relationship influenced the price (unless the importer can show the price was not affected or meets a test value). In those cases CBP moves down the hierarchy.

Why Valuation Is Worth Getting Right

Correct valuation avoids both overpayment and the penalties that follow undervaluation. For related-party transactions and transfer-pricing arrangements, valuation deserves particular attention and documentation.

Frequently Asked Questions

How does CBP decide the value of my goods?

By the hierarchy in 19 U.S.C. § 1401a, starting with transaction value (price paid or payable plus additions).

What is an “assist”?

Something of value the buyer provides to the producer (materials, tools, molds, design work) that must be added to the customs value.

What if my supplier is related to my company?

Related-party sales can still use transaction value if the relationship did not influence the price or a test value is met; otherwise CBP uses another method.

What happens if I undervalue?

CBP can issue a rate advance and, if it finds a material false statement, a penalty under 19 U.S.C. § 1592.

Related Customs & Trade Guides

Talk to a Customs Valuation Attorney

If CBP has questioned your declared value, or you have related-party or royalty issues, valuation is where duty exposure hides. Trembach Law Firm advises California importers on customs valuation and defends valuation disputes. Call (818) 514-7680.

Contact Trembach Law Firm at (818) 514-7680 for a confidential consultation.

Trembach Law Firm | 27001 Agoura Road, Suite 350, Calabasas, CA 91301