US customs law sets six valuation methods in a strict order, and CBP must use the first method that can be applied. Transaction value comes first and settles almost every commercial entry. Then the transaction value of identical merchandise, then similar merchandise, then deductive value, then computed value, then fallback. The importer may request computed value before deductive value, which is the only flexibility in the sequence. Everything else is mandatory in order.
Computed value gets used when the methods above it cannot be. That happens when there is no sale, as with consignment stock or goods supplied on loan, when the price depends on a condition whose value cannot be worked out, or when the buyer and seller are related and the relationship affected the price. In those cases there is no transaction to value, and no resale to deduct from, so the value has to be built from the cost side.
The build has four parts. The cost of materials and fabrication used to produce the merchandise. An amount for profit and general expenses that reflects what producers in the exporting country typically earn on sales of the same class of goods to the United States. The cost of packing. And any assists not already included in the materials cost. The profit and general expenses figure is the hard part: it has to reflect what producers in the exporting country typically earn, not what this producer earned, and that number comes from industry data, not from the importer's own books.
The practical problem is access. Computed value requires the foreign producer's cost and production data, and most producers will not share it. A factory that hands over its cost breakdown hands over its margin, and few suppliers do that for a customer. Transaction value versus computed value is the comparison that matters here: transaction value starts from a price the importer already has, and computed value starts from data the importer usually cannot get. That is why computed value is the method everyone knows and almost nobody uses.
Ask for computed value before deductive value when the resale price would give a worse answer than the cost build. Deductive value works backward from the US resale price, deducting commissions, general expenses, profits, transportation, insurance, duties, and processing costs, and it starts from the unit price at which the merchandise sold in the greatest aggregate quantity. For a product with a thin US margin or an unusual resale structure, that backward walk can produce a value that has little to do with what the goods cost to make. Computed value, for all its difficulty, at least starts from the goods themselves.
Document the request. The importer asks CBP to apply computed value before deductive value, and the request has to be made, not assumed. Deductive value from the resale price is the default fourth method, and CBP will use it unless the importer asks for the swap. If the producer will share cost data, even partially, the computed value route is worth pursuing. If the producer will not, the honest answer is that computed value is unavailable, and the entry moves on to the next method that can be applied.
Computed value builds the customs value up from the cost of production: materials and fabrication, an amount for profit and general expenses, and packing costs. It is the fifth method in the valuation hierarchy under 19 USC 1401a.
When transaction value, identical merchandise, and similar merchandise cannot be applied, and the importer requests it before deductive value. It is used when there is no sale price, no comparable sale, and no resale price to work back from.
It requires the foreign producer's cost and production data, and most producers will not share their cost breakdown. Without that data, the method cannot be applied, and the entry moves to the next method.
Yes. Under 19 CFR 152.101(c), the importer may request computed value before deductive value. That is the only flexibility in the valuation hierarchy. Everything else is mandatory in order.