At AIAG, progress is powered by bringing together the brightest minds in customs, trade, and automotive supply chain management. This year, we’re honored to welcome Bruce H. Leeds — senior counsel at Braumiller Law Group PLLC and a respected authority in global trade compliance—to our community of thought leaders. With a career spanning U.S. Customs, senior roles at Hughes and Boeing, and service on multiple national advisory boards, Bruce embodies the deep expertise and collaborative spirit that drive our annual AIAG North American Customs & Trade Town Hall.
Ahead of his session on customs valuation and the evolving USMCA landscape, we invited Bruce to share his perspective—offering our engaged network actionable insights for navigating today’s complex trade environment.
AIAG: One of the topics you are going to cover at the AIAG North America Customs & Trade Town Hall is first sale valuation. Can you explain a little more about that?
Leeds: It helps importers to either reduce their liability or not pay anything at all. If done properly, first sale valuation can result in a lower dutiable value. Here’s a classic example from the early 1990s: The Metropolitan Transit Authority of New York wanted some subway cars, so they placed a purchase order with a Japanese trading company in Los Angeles. This company then subcontracted to another company in Japan to make the subway cars, and then the cars were shipped directly to New York. So, U.S. Customs said that the value of the cars was based on the purchase order with the first company in Los Angeles, but the New York Transit Authority said no — the value should be the value paid to the company in Japan that actually made the cars, which would, of course, be a much lower value. The case went to court and U.S. Customs ultimately lost that case on appeal. The decision was that the price paid to the manufacturer in Japan is the true customs value.
AIAG: Are most automotive companies familiar with this first sale valuation strategy?
Leeds: It depends on how sophisticated they are, or if they get good consultants or customs brokers. When I worked for Hughes and for Boeing, often we would receive a shipment from a foreign supplier that we'd never heard of before, and we’d say, “How did this happen? We never heard of these guys, and they’re shipping us stuff.” But when we looked at the purchase order, it was to a U.S. company. So we placed an order with a U.S. company that would then contract to have the work done by a foreign company that shipped directly to us. It often happened without us even knowing what was going on until we looked into it.
If a U.S. automaker is placing orders to have things produced, then they should explore where these things are actually coming from, and what is the true value of the merchandise. It can save them money.
AIAG: Trade law and tariffs are changing so frequently. How do you stay updated?
Leeds: Honestly that's almost a full-time job. Number one, of course, is that we're handling transactions for our clients, so we are exposed to it that way. We also subscribe to specific newsletters, and I'll scan through them every day to see, “Okay, is there something here that’s new and different that we need to know about? There can literally be something new on any given day. Frequently something is announced, and then the administration walks it back. You have to stay on top of that as well.
AIAG: What have been the biggest challenges facing automakers since this new administration?
Leeds: The biggest challenge right now is just staying on top of things because the rules change all the time.
AIAG: What will you talk about in your presentation at AIAG’s Customs Town Hall this November? What can an attendee expect to learn?
Leeds: First will be the first sale rule, which is also referred to as the “uncovered for sale rule” — when can you use it and when maybe you cannot use it, what's required, that sort of thing. Then I want to talk about the USMCA. When does that apply? When does it not apply? We’ll also talk about the future of USMCA. It’s supposed to sunset in 2026 unless it’s extended. We will discuss the likelihood of that under the current administration. And of course, we will be talking about the latest developments in the Trump tariffs and how they will impact the automotive industry.
AIAG: Who is this presentation geared toward?
Leeds: People who handle imports for either automakers or suppliers. The conversation will be as applicable to OEMs as it is to suppliers.
AIAG: When attendees leave your talk, what action steps do you want them to take next?
Leeds: They will have the information they need to perform their due diligence. They will know if they have a first sale transaction that will result in a lower value and less duty. They will understand the requirements for that and how to prove it because you can't just start claiming it. You need the documentation to support it. And we will have the very latest information on tariffs.
Register now for the AIAG North America Customs & Trade Town Hall, a hybrid event occurring in person and online—that offers credits from National Customs Brokers & Forwarders Association of America (NCBFAA).
