For more than a year, retailers have navigated the most turbulent tariff environment in modern U.S. trade history — through sourcing diversification, price increases, inventory hedges, and diplomatic silence. But throughout all of it, one quiet tool has done more heavy lifting than almost any other: the First Sale customs valuation rule. Now, that tool is in Congress's crosshairs.

On February 12, 2026, Senators Sheldon Whitehouse (D-RI) and Bill Cassidy (R-LA) introduced the Last Sale Valuation Act, a bipartisan bill that would require importers to calculate tariffs based on the final price paid in a supply chain — rather than an earlier, lower price from a transaction between a foreign manufacturer and a middleman. Sourcing Journal reports the legislation was introduced with backing from domestic textile manufacturers who argue the current rule "significantly lowers duties paid by importers" and disadvantages American producers.

How the First Sale Rule Works — and Why Retailers Love It

In a typical multi-tiered supply chain, goods change hands multiple times before reaching U.S. shores. A factory in Vietnam might sell finished goods to a trading company at one price; that trading company then sells to the U.S. retailer at a higher price. Under the First Sale doctrine, importers can declare the lower factory price as the dutiable value — not the price they actually paid.

In a normal tariff environment, that gap is meaningful. In a 145-percent-tariff environment, it's potentially massive.

Retail Dive notes that First Sale has been "increasingly leveraged" by businesses as part of their "mitigation toolkit" over the past year. A 2025 KPMG report found the tactic is historically most utilized by apparel and footwear importers — precisely the sectors that have faced the highest tariff rates — though its use has spread broadly as companies look for any legal lever to reduce duty exposure.

According to Livingston International, eliminating First Sale would shift the dutiable base "upward to the highest transactional value prior to U.S. entry" — meaning importers would owe duties on the inflated middleman price, not the manufacturer's price.

Who Wins, Who Loses

The bill's supporters — the National Council of Textile Organizations, the Rhode Island Textile Innovation Network, Rethink Trade, and the Coalition for a Prosperous America — argue the First Sale rule functions as a backdoor subsidy for foreign manufacturers and importers alike, allowing them to dodge the full intended burden of U.S. trade policy.

The opposition is coming from the trade groups who represent the brands and retailers doing the importing. The American Apparel and Footwear Association has called the First Sale doctrine a rule "created by Congress and reaffirmed by the courts," arguing it ensures tariffs are assessed on the actual — not artificially marked-up — value of goods. Greenberg Traurig's trade practice warns the bill would "potentially increase duties for importers," with higher landed costs likely passed through the supply chain.

For mid-tier apparel chains already squeezed by tariff pressure, the implications are direct: thinner margins or higher prices, with little room to absorb either.

The Political Timing Is Deliberate

The Last Sale Valuation Act has no scheduled congressional consideration yet, and industry opposition makes its path difficult. But its introduction is not accidental. The bill arrived as retailers were increasingly vocal about using First Sale to blunt tariff impact — Supply Chain Dive covered the tactic extensively after it emerged as a hot topic in earnings calls and supply chain conference panels.

Senators Whitehouse and Cassidy are unlikely political bedfellows — a progressive Democrat and a Louisiana Republican — and their pairing signals this issue can be framed as both an anti-loophole crusade and a pro-domestic manufacturing argument. That combination could attract votes from both sides of the aisle if the trade war drags into 2027.

The broader subtext: the administration's tariff agenda was designed to pressure importers. Congress is now watching to see whether clever customs math is undermining the policy's intent.

What Retailers Should Watch

For now, the bill is a threat, not a law. But retailers and their trade counsel should treat it as a signal. The era of quiet tariff mitigation tactics may be ending — every tool in the playbook is now visible, scrutinized, and potentially subject to congressional action. If the Last Sale Valuation Act advances through committee, even in modified form, the cost of importing goods to the United States just got more expensive to model.

The irony isn't lost on industry observers: just as retailers thought they'd finally found a way to stabilize their landed costs, Washington is debating whether to take that tool away, too.