# The Six Valuation Methods, in Order: When CBP Moves Down the List

Source: https://landedgehq.com/blog/2026-11-10-six-valuation-methods-order/

Cross-border operations guide · November 8, 2026


**Short answer:** CBP values imports by transaction value first, and moves down the list only when transaction value cannot be used: identical merchandise, similar merchandise, deductive value, computed value, and fallback. The order is the law, and the method that applies decides the duty. An entry that reports transaction value when the conditions fail is an entry that gets revalued, plus the conversation about why.

## Transaction value, and the four conditions that keep it

Transaction value is the starting point for nearly every customs valuation. It equals the price actually paid or payable for the merchandise when sold for export to the United States, plus certain mandatory additions, under 19 USC 1401a and 19 CFR 152.103. CBP uses a two-step process to determine the tariffs for imported goods: classification first, then valuation, and the valuation step starts with transaction value. The method works only when four conditions are satisfied, each designed to confirm that the price reflects a real, arm's-length deal: no restrictions on the buyer's disposition or use of the goods, no conditions or considerations for which a value cannot be determined, no proceeds of a subsequent resale accruing to the seller, and the buyer and seller not related, or related but with the price shown to be arm's length.

When any of those conditions fails, CBP does not guess. It moves down the list. The list is the law, and the order is fixed: transaction value of identical merchandise, transaction value of similar merchandise, deductive value, computed value, and fallback value. The importer does not get to choose the method that gives the lowest duty. CBP applies the first method that can be used, and the first method that can be used is usually the one that costs the most. [Transaction value versus computed value is the comparison that decides most disputes](https://landedgehq.com/blog/2026-11-07-transaction-value-vs-computed-value/), because computed value is the method CBP reaches when the invoice price cannot be trusted.

## The middle of the list: identical, similar, deductive

Identical merchandise value uses the transaction value of identical goods sold for export to the United States at or about the same time as the goods being valued. Similar merchandise value does the same for goods that are similar in characteristics and component materials, and that perform the same functions and are commercially interchangeable. Both methods need a real sale to point at, and the sale has to be close in time and in quantity. The methods fail most often because there is no identical or similar sale on record, or because the sale that exists is from a related party and the price is not arm's length.

Deductive value works backwards from the resale price. CBP takes the price at which the goods, or identical or similar goods, are sold in the United States, and deducts the commissions, the profit and general expenses, the transportation and insurance, and the duties and taxes, to arrive at the value. [Deductive value works backwards from the resale price](https://landedgehq.com/blog/2026-11-08-deductive-value-resale-price/), and it is the method CBP reaches when there is no usable transaction value and no identical or similar sale, but there is a resale in the United States to work from. The deductions are the argument: the profit and general expenses figure is where the importer and CBP disagree most, and the disagreement is settled by the importer's own books.

## The bottom of the list: computed and fallback

Computed value builds the customs value from production costs: the cost of materials, fabrication, and processing, plus the profit and general expenses, plus the assists, the packing, and the royalties that apply. [Computed value builds the value from production costs](https://landedgehq.com/blog/2026-11-09-computed-value-production-costs/), and it is the method that requires the most documentation, because the importer has to prove the factory's costs, not just the invoice price. The method is rarely the importer's first choice, because the factory's books are not the importer's books, and the factory does not always share them. Fallback value is the last resort: a reasonable means consistent with the principles of the valuation agreement, using the data available, and it cannot be based on the selling price in the United States, the price in the country of exportation, or an arbitrary or fictitious value.

The check before you file is the conditions test: are there restrictions on the buyer's use, conditions that cannot be valued, resale proceeds to the seller, or a related-party price that cannot be shown arm's length? If any of those apply, transaction value fails, and the entry should be prepared for the next method down, not filed as if the first method still worked. [CBP rejects transaction value for exactly these reasons](https://landedgehq.com/blog/2026-11-08-customs-valuation-cbp-rejects-transaction-value/), and the rejection arrives at liquidation, when the duty is already assessed and the correction is a penalty discussion. The importer who knows which method applies before filing is the importer who does not get revalued.

## Frequently asked questions

### What are the six customs valuation methods?

In order: transaction value, transaction value of identical merchandise, transaction value of similar merchandise, deductive value, computed value, and fallback value. CBP applies the first method that can be used, and the importer does not get to choose.

### When does CBP move past transaction value?

When any of the four conditions fails: restrictions on the buyer's use, conditions that cannot be valued, resale proceeds accruing to the seller, or a related-party price that cannot be shown arm's length.

### What is deductive value?

The resale price in the United States, minus commissions, profit and general expenses, transportation and insurance, and duties and taxes. It works backwards from the resale price when there is no usable transaction value.

### What is fallback value?

The last resort: a reasonable means consistent with the valuation agreement, using the data available. It cannot be based on the US selling price, the export country price, or an arbitrary or fictitious value.